Is “good enough” the secret to wealth?

Normally the Wall Street Journal starts touting tech innovations three months before they’re on the market, and then spends the next three months reviewing how they don’t work quite right. Got to keep that market churning, no? But two recent articles about trends have me amused and bemused, and I think they relate to how much dough you hold onto.

The first one was on how people are not replacing their electronic devices as fast as they used to. Basically, after the initial kinks are worked out (and that time span is getting shorter), electronic devices pretty much work. As long as there’s not a major change in the operating system, many people can put up with occasional crashes and slow response, especially since there’s no guarantee they won’t experience those same issues with the brand new device. I can see this with my own experience with e-readers. I stood in line one Black Friday to purchase an early Nook for $100 back in, I think, 2010. It was good for about a year before I got tired of the torturous internet connection, as soon as I discovered that links and the ability to research something online that I’d just read about was one of the chief benefits of e-books. In December of 2011, I purchased an iPad 2 and I haven’t replaced it yet. I did bash the screen in, but when I thought about replacing the whole thing, I decided I could live with it by spending the $100 or so to replace the screen. It was just good enough—even though its crash rate has gone up since various iOS updates.

My cell phone contract is up next month, and I’m thinking over whether I’ll replace my iPhone 5. It works just fine, but if I don’t, I read that I’ll still be paying for the same phone over the next contract, and I hate to pay twice for the same thing. My desktop dates from who knows? 2010? 2011? I used to assume computers were good for 3 years, mostly because of operating systems and updated software not working on old ones, but right now I’m not seeing any problems. Still, at some point I’ll probably switch to an all Apple system.

What’s the financial planning point? Well, things have changed. I used to fantasize about being an early-adopter—one who was always the latest with the greatest. In fact, I lusted to be able to afford the $2,500 Macintosh back in the 80s. But I’ve seen enough computer history to have learned that 1)the price comes down in 2.0 and 2) 1.0 usually doesn’t work very well. So being an early adopter is a little bit like lighting a cigar with a $100 bill—fun and flashy but a waste.

Lately I’ve seen the same thing with cars. When I was a kid, many people replaced their cars every two years, the more frugal waited five, and you were driving a rust bucket heap with fenders flapping by ten years. Then cars just got better. My clients routinely drive cars that are ten years old, with the oldest one so far a 1989. Virtually every one of these people could have bought any car they wanted.

Besides the fact that at least some devices seem to be better made and last longer (hear that, clothing industry?), I think a lot of people (my hand is up) simply hate the research required to buy a complex device, and in the case of cars, the overwhelming feeling that you will be taken every time. .That especially, and the fact that I have a kid in college, keeps me driving my 2002 Subaru.  It’s very easy to just keep putting it off until you have a complete breakdown. Consumer Reports has an interesting scale on fix vs. replace—if the fix costs more than 50% of the value of the car, replace. When I think about the cost of a couple of months of car payments (or the sticker on a new car), fixing has won so far. For other things, check the warranty! My daughter recently picked up a $300 set of Bose headphones from the free box at her college—they were still under warranty and she had them fixed for $100 (apple didn’t fall far from the tree).

Finally, this morning WSJ had an article on trendy food. There’s not much I won’t eat (lima beans and jello mold), although my daughter reserves a special circle of hell for kale. But I’m always stunned by food trends. Local and organic make sense to me based on quality and taste. But pot roast out and pan-sauced chicken breasts in? No one eats turkey tetrazzini anymore? People aren’t ready for Moroccan sauces?  Jeez, if it tastes good, it tastes good, and I don’t care if my mom used to cook it in 1957. It always stuns me that when I make a moron-level cake from the Joy of Cooking, people rave about the taste. In fact, lately if I simply make a cake from a box, people rave about the taste because all we are ever served nowadays is ersatz cake product from Sam’s, Jewel, or Costco. Years ago I was stunned to learn that éclairs never have actual custard filling anymore, because they’d have to be kept chilled. I never look at Facebook that some friend hasn’t linked to the latest hype on what we should eat, what precise method of exercising is best, and please god save me from all the vegan mumbo jumbo.

 

What I chiefly object to is that once it’s trendy, it becomes way more expensive. Ask my dog—she USED to enjoy chicken wings. We have no idea what’s seasonal anymore (hint, it’s usually what’s cheapest) and cooking shows are entertainment not instruction (except for my beloved Jacques Pepin).

Okay, before I rant on for several more pages, let me summarize the financial points I’m making:

 

  1. Save yourself time, money, and aggravation by being slow to adopt the new
  2. Fix it when it’s broke, as long as it makes financial sense
  3. Try to resist hyped trends. They’re making a fool of you.
  4. Don’t keep up with the Joneses. They don’t have any money saved for retirement.

Grumpy cat will now return to her regularly scheduled programming.

About the author

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Danielle L. Schultz, CFP®, CDFA

Danielle L. Schultz, the principal financial planner of Haven Financial Solutions, is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a NAPFA-registered Financial Advisor, and a Registered Investment Advisor in the State of Illinois. She studied financial planning at Northwestern University’s Certified Financial Planner™ certification program. She also holds a Series 65 license (Registered Investment Advisor Representative) and a CCPS (Certified College Planning Specialist).

She writes a regular column for Better Investing magazine and is currently working on a revision of their mutual funds handbook. In addition to academic training and professional experience, Ms. Schultz has personally managed Social Security, Medicare, retirement and long-term care issues; college funding concerns; and cash flow and transition planning in self-employment and divorce situations. Her social work background gives her an innovative perspective on financial planning issues; for her, financial planning is not only about money, but also a key component in a satisfying and well-lived life.

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