The Simple Dollar Weekly Roundup: $3,000 Handbag Thoughts Edition

Continuing that discussion about the $3,000 handbag from earlier this week, I wanted to clarify something. If your finances are in order, you’re putting money away for your future, and you’ve been planning and saving for that $3,000 handbag because it’s a high-quality one and it’s something you’ve wanted for a long time, that’s great! Go for it!

My problem comes in when you have a young professional loaded down with debt racking another $3,000 on the ol’ credit card because he or she wants it.

Take me, for example. My splurges are on high-quality kitchen implements. Do I really need to spend a hundred dollars on a chef’s knife? No, probably not. But I use my chef’s knife almost every day and I know quite well how useful a quality chef’s knife can be.

The big catch here is that I can afford it and I am planning for it. I’m not going out and blowing $5,000 on everything I could possibly want in my kitchen. I’m looking at what I actually need and use and replacing my low-quality pans and knives and implements a piece at a time with high-quality items.

I’d rather have one great knife than ten junk ones. The kicker is that I actually know what the difference is.

On with some personal finance articles.

Can Webkinz Teach Kids Personal Finance? I really wish Webkinz (and other such companies that target children) would think outside the box a bit like this. It’d certainly help to convert someone like me from a highly hesitant parent to one that might be more involved and supportive of this interest in my child. (@ clever dude)

Why “Buy One, Get One Free” Is Usually a Bad Deal As with any deal, evaluate it properly. Something that seems like a great bargain often isn’t. (@ wise bread)

Do Cars Stop Depreciating After 200K Miles? I’m curious about your take on this. I do agree that after a certain point, depreciation of a car’s value is minimal. You’ll take it in to a “push pull drag” sale and get the same amount for it, no matter what. (@ pro bargain hunter)

Hybrid vs. Gasoline Vehicle Comparison – Are Hybrids Worth it? The most efficient car in terms of carbon emission and fuel efficiency isn’t a hybrid. It’s driving an old Toyota or Honda into the ground. (@ million dollar journey)

A Nation in Debt This is a very long article, but well worth the time investment. (@ the american interest)

You Don’t Have to Be a Millionaire to Invest Like One Excellent advice for investors who don’t have much startup money. (@ usa today via free money finance)

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69 thoughts on “The Simple Dollar Weekly Roundup: $3,000 Handbag Thoughts Edition

  1. Frugal Dad says:

    Nice roundup this week! I drive a 1991 van with over 200,000 miles on it, and suspect that I could get the same for it today (not much) that I could two years ago when it reached the 200k mile milestone. I tend to agree that at a certain mileage point the depreciation curve just about flattens out.

  2. Thanks for the mention Trent! The hybrids do become more appealing if gas prices increase significantly and/or if the government gives more green tax credits. But for now, they are simply too expensive!

  3. HI Trent,
    I am going to echo Frugal Dad on this one.
    I have a 2003 Honda Civic and my wife drives a 2003 Honda CRV. Both have about 70,000 miles on them and we plan on driving them into the ground.

    Prior to these vehicles I owned a 1991 Honda Civic that had 250,000 miles on it when I sold it/gave it to my brother. All I did to that car was fill it with gas and change the oil! Hence, I’m driving Hondas for life now.

  4. Tyler Corlen says:

    How do you tell the difference between a good, quality knife and a cheap one?

  5. KellyB says:

    Hi Trent,
    Love the blog. Any way you can make the browser open up a new window when clicking on one of the links in your articles? Right now it just takes me to the new site, and then I have to backtrack to find you again, or reopen the site.
    Thanks!
    KellyB

  6. April says:

    “My problem comes in when you have a young professional loaded down with debt racking another $3,000 on the ol’ credit card because he or she wants it.”

    EXACTLY. All of the arguments about owning $3000 purses if you can afford it are pointless because the book was writen for young professionals IN DEBT, and they should not spend $3000 on a bag if they have credit card debt. End of story.

  7. Diane says:

    Trent, when you replace your pots and pans, I recommend All-Clad. They are a dream come true and well worth the $500 for all the pans I need.

  8. Trent says:

    KellyB: Try holding the Ctrl button on your keyboard while clicking.

  9. Deborah says:

    “The most efficient car in terms of carbon emission and fuel efficiency isn’t a hybrid. It’s driving an old Toyota or Honda into the ground.”

    Absolutely – but then what?

    My Camry has 190,000 miles on it; I know in 2 years – if I’m lucky enough to still have it – it’ll be at least 250,000 (and probably much closer to 300,000). And I’m already trying to decide if I want a used Prius, Corolla – or even an Echo (yes, I’m a Toyota girl).

    This is where most people stop the conversation: “There’s no need to get another car; just keep driving what you have.” The problem is, eventually there IS a need – no car lasts forever.

  10. kaffeeneko says:

    I get my handbags at Goodwill for $3.99. Very nice ones in fact. When they give out I get a new one for same low price.

  11. Trent says:

    Deborah: late model used. Get a late model used version of a fuel efficient and reliable car (turn to magazines like Consumer Reports at the library to find out the best options), then drive it into oblivion. Rinse and repeat. That’s the cheapest way to keep wheels.

  12. Tom says:

    There is absolutely no justification for a $3K handbag, ever. Anything beyond durable and functional with a modicum of style is designer fluff. Buying these things just provides capital to the iditos who will design more useless luxury goods no one needs.

    On the other hand, the distintion between a $100 chef’s knife and a cheap one ($10-20) is appreciable. The former fits the hand better, cuts better and retains its edge longer. If you cook, it is a necessity.

  13. felix says:

    Is spending $100 on a chef’s knife frugal?

    The calculation is rather straightforward. Say your regular kitchen knife is $5 a piece and lasts 3 years. A chef’s knife, being 20 times more expensive, better last at leat 60 years to break even.

    Of course there are other factors involved as well. Suppose using a chef’s knife boosts your morale, Trent, so your cooking productivity increases by 15% :-)

    So, enjoy your cooking and splurge from time to time.

  14. Vartan says:

    I have to very strongly disagree with the premise of your article here. The reason why it’s bad to buy a 3,000 handbag should not be purely financial, I would say it’s downright UNETHICAL, regardless of whether or not it increases debt or whether you can afford.

    I agree that obviously you shouldn’t splurge on luxuries when you are in debt, but I think what we need to move away from here is the assumption that people can simply do whatever they want with whatever is theirs and that we have no right to judge that. 3,000 dollars represents literally thousands of lives in terms of what that money could do for charity and we should all be horrified and condemn people who choose to waste massive amounts of money simply because they can while ignoring the suffering around them.

    Whenever I see shows like “Lifestyles of the Rich and Famous” I am always amazed that no one else feels that these celebrities are doing anything wrong by buying five houses and having a million dollar car collection they don’t even drive. If you have the ability to give that money to charity and choose not to I see that as clearly unethical, that 3,000 handbag is a crime against ethics more than it is a bad financial decision.

    Just for some perspective, 3 grand could literally build sustainable wells in the Third World, how can someone not be judget for instead wasting it on a BAG?

  15. felix says:

    KellyB,

    I highly recommend you switch to Firefox. The new version 3 Release Candidate 2 is solid as a rock and I use it daily.

    With Firefox, when you right click on a link, you get the options of opening it in a new tab or in a new window. So you get to stay on the site you are reading and get the new Web page at the same time.

    Totally great.

  16. felix says:

    Umm…goofed. I forget to leave the address of the Mozilla Web site, so here it is.

    http://www.mozilla.com/en-US/firefox/all-rc.html

  17. JM says:

    Check out the R. H. Forschner 8-Inch Chef’s Knife from Amazon. It’s only about $20 and consistently ranks high among top knives. I have one and love it.

  18. Dave says:

    I enjoyed this post simply because I just spent ~$100 on a chefs knife this weekend. I also spent ~$50 on a smaller paring knife. Both were 10% off which helped a bit on the price and I’m completely happy with them. Chopping up veggies is so much more fun now.

    They went straight on the credit card for the reward points. I pay the card off in full each month so no interest is accrued. Not sure if it’s the most frugal purchase but it’s fun to splurge from time to time.

  19. gr8whyte says:

    FYI, older Civics and Accords have a systematic fuel pump relay defect that causes the engine to suddenly quit on hot days. No need to buy a new one, they can be repaired with a screwdriver, a soldering iron and solder (a simple job, google for details). Happened to my 92 Civic @ ~195 kmiles; strongly recommend a preemptive fix.

  20. Christopher says:

    JM: I have a Forschner 8-inch and a J. A. Henckels Pro-S 7-inch Santoku. Based purely on the cost margin, the Forschner is a much better value. I really like the balance of the Henckels, though, so if I had it to do over again I’d still spend the $90 on the Santoku, but only because I use it a good 95% of the time. My paring knife is a Forschner because I just don’t use it enough to justify anything more expensive. I also have a Henckels International utility knife which I picked up for something like $5 that I have sharpened coarsely at a 10 degree angle for use as a dedicated meat slicer. It works great for what I want it for, but would be awful for anything else.

  21. Stephen says:

    Interesting article about the hybrids. I don’t think the numbers are that accurate though. Gas has yet to hit 4.91 a gallon here (yet..gulp) and am not aware of where it has in the US. And the price of the hybrids seems slightly inflated (Civic Hybrid is >6k over in my case). Methinks one should take that table and do the math with more appropriate local numbers to get a realistic number.

  22. Docblogger says:

    What really doesn’t make sense is to sell your gas-guzzling SUV now in hopes of getting a better-milage vehicle because the gas is so expensive.The dealers’ lots are filled with those, and you’ll be immediately low-balled by… yes, used car salesmen, so you’ll get very little for your SUV. After that, you’ll lose again on purchase of a fuel-efficient car, because there are no bargains to be had on those now!

  23. Angie says:

    Stephen – it’s $4.91 here in California. :( My neighbor just swapped their large, fairly new Toyota truck for a new Chevy Aveo. I’m dying to crunch the numbers to see if they took a loss on the truck when you figure in the savings from gas or if they come out ahead… yeah, typical nosy neighbor, that’s me! :)

  24. Alan says:

    Not to sound like a shill for Microsoft, but IE 7 also allows tabbed browsing and an option to right-click on a link to open it in a new window.

    Speaking of high gas prices, I just checked http://www.sanfrangasprices.com and the well-heeled in San Mateo are paying $5.11 for regular gas at one Shell station. Glad I don’t live there anymore. We’re paying a mere $4.10 to $4.20 per gallon here in not-so-sunny Portland.

  25. Katie says:

    My cousin sells Hondas and Toyotas. His advice on used is to find the nicest, top end, luxury edition of whatever you are looking for. He said once you get to 75k+ miles the price will be the same whether its a civic or accord or whatever. He also said it can be really hard to find them because people tend to keep passing them along to others rather than selling them back.

  26. Looby says:

    @ Felix, many of the high quality knives have a lifetime warranty. I used to work in a cookstore and we replaced a Henckels chef knife that was over 50 years old (it had been a wedding gift so the customer could date it)- the wooden handle had cracked, with the latest model, which if it lasts another 50 years is pretty good value if 2 generations can use it.

  27. Shevy says:

    The Webkinz article was interesting, as my 5 yo DC and 3 yo granddaughter spend a *lot* of time on there. (One of my adult sons gave them their first pets and they’ve kept adding since then.)

    While a lot of the ideas in the article were thought-provoking (such as having a virtual bank or investments for KinzCash, as well as more charity opportunities than just tipping Arnie in the Curio Store) I find that the biggest things the girls are learning from Webkinz are computer skills as opposed to financial ones.

    Using the touch pad improves their fine motor co-ordination, Lunch Letters (an arcade game) is teaching my 5 yo keyboard skills, and gardening teaches real gardening skills. It takes days of watering and occasional raking to be able to harvest a crop, which may be only one or two bunches of carrots, and just a few days inattention results in dead plants that have to be dug out.

    My daughter can type her own user name and password (case sensitive) without prompting and has progressed to relatively high levels in several games (notably to Level 8 in Bananza, where you help a monkey jump for bananas while avoiding spiders and falling coconuts. She also has a much better idea of working to pay for desired purchases and often sends virtual gifts of items she’s won or bought to her niece.

    In terms of computer skills, I think Webkinz has given my daughter at least an 8 – 10 year jump on where my eldest son was as a child and he’s now in a management position with a large ISP.

    While I see areas that Webkinz could improve, I don’t think it needs to faithfully mirror every aspect of real life in order to be beneficial.

  28. Jules says:

    $4 gas…and every European (and American ex-pat like me) who’s reading this is laughing his @$$ off. Sorry, but real pain is Dutch gas prices; if you do the euro-dollar conversion, it comes out to $9-10 per gallon. It’s the highest in Western Europe, but even in most other countries it’s about double what Americans pay. Newsweek (actually, Goldman Sachs, which Newsweek quotes) forecasts $200/barrel gas, so start saving up for those hybrids!

    Luxury items are billed as such, and as such you won’t go too far wrong if you blow an obscene amount on it. It’s the items that are too expensive to be frugal but not *quite* quality enough to be luxury that you can go wrong in. And, incidentally, are the kinds of things that drive people into debt, because they suddenly think “Oh, it’s affordable luxury!” The WSJ ran a neat article on this a few years ago, explaining the rise of stores like the Banana Republic. Alas, I don’t have a subscription, or a site link, as the article was from several years ago.

    I read “A Nation in Debt”, and all I can say at the end of it is thank God my counterpart and I have similar attitudes towards money. Philadelphia is chock full of (sadly) bail-bond offices and payday loan places–I know the temptation. But my parents have always preached (and, for the most part, practiced) self-reliance (my dad had to borrow start-up capital when he bought out the company he used to work for), and the very idea of being in debt is viscerally repulsive to me. Since when did Americans get so comfortable owing other people? Especially in amounts that they will take a lifetime to pay off?

  29. Gabe says:

    I’ve noticed that when I’m shopping, “Buy one, get one free” sales always seem much better to me than they are. Something about seeing that word “free” just charges you up in a way that “50% off” doesn’t quite do. So I’m always careful to ask myself, “Would I buy two of these items if they were 50% off?” That somehow makes the comparison clearer for me.

  30. michael says:

    @felix & KellyB:
    If you have a scroll wheel on your mouse, you can click links with the scroll wheel (aka center-click) and they will open in a new tab in Firefox and IE7.

  31. Ken Oatman says:

    Trent, may I be blunt? I think you’re moving sideways with your excuse mechanism. Don’t take it from me, Mark Bittman in the NY Times says so in this article (from his column titled “THE MINIMALIST”, “A No-Frills Kitchen Still Cooks”:

    “I started with an eight-inch, plastic-handle stainless alloy chef’s knife for $10. This is probably the most essential tool in the kitchen. People not only obsess about knives (and write entire articles about them), but you can easily spend over $100 on just one. Yet go into any restaurant kitchen and you will see most of the cooks using this same plastic-handle Dexter-Russell tool. (Go to the wrong store and you’ll spend $20 or even $30 on the same knife.)”

    Seehttp://www.nytimes.com/2007/05/09/dining/09mini.html

  32. Lola says:

    I just think buying a 3,000 bag is wrong. In fact, I think selling a bag for that price is simply immoral.
    http://www.escrevalolaescreva.blogspot.com

  33. Kate says:

    When the handbags started selling for exhorbitant prices, I quit reading fashion magazines. Most of the clothes they show are impractical for working women to wear to the office anyway. Now I read blogs – for free.
    I’m trying to save up to make as large a down payment as possible for my first house and would rather put the $3,000 towards that account.
    On a related note, my 10-year-old Saturn bit the dust last year and I replaced it with a used 2007 Toyota Corolla with less than 15,000 miles on it. My mechanic says it ought to last me at least 250,000 miles.

  34. Vartan says:

    I have to say the most disturbing thing about a 3,000 dollar handbag is not how stupid of a financial choice it is, but that is rather a grievous moral crime to buy something so useless and expensive when that money could go to charity.

    Even if a person saves up all their money and it doesn’t put them in debt, morally the decision is indefensible.

  35. MoneyBlogga says:

    “Payday lenders serve up “fast cash” and “free money” to 15 million Americans every month.”

    From “A Nation in Debt”, I never would’ve thought the market was that huge to tap. Whenever I see one of these places, I think “Who would even bother with that?” Apparently 15 million people a month. Amazing. Bankruptcy taught me a lesson 10 years ago. As a result, I have zero consumer debt. High interest mortgage loans are teaching me a lesson now. Never again.

  36. Trent says:

    I’ve tried several cheap knives, and I constantly cut myself with them because the handle is too short. I wear a size 16 ring – my hand is massive. The Global one is the only knife that’s ever felt *right* (or close to it) in my hand. It’s simply the best knife I’ve ever tried.

    Just tonight, I pulled the old chef’s knife out of the drawer (I needed a second knife) and almost instantaneously sliced my finger because my grip on it was awful. I’m currently wearing a Band-Aid on my hand because of it.

  37. Trent says:

    “I agree that obviously you shouldn’t splurge on luxuries when you are in debt, but I think what we need to move away from here is the assumption that people can simply do whatever they want with whatever is theirs and that we have no right to judge that. 3,000 dollars represents literally thousands of lives in terms of what that money could do for charity and we should all be horrified and condemn people who choose to waste massive amounts of money simply because they can while ignoring the suffering around them.”

    Here, you get into the classic “capitalism versus socialism” debate, which actually turns into a civil liberties debate. Does a person have an exclusive right to do whatever they want with the fruits of their labor? That comes down to a personal value answer, because there is a compelling argument on each side of that question.

  38. George says:

    Personally I would not spend $3000 on a handbag. But what if you substitute “handbag” with “computer system”? Would that change your position in the discussion? One might argue that a handbag doesn’t have the utility of a computer and therefore it’s a different question but maybe this audience is a bit biased in that regard.

    Although probably not applicable to this readership, but suppose the handbag is a necessary part of someone’s ensemble, say someone with very high-end clients that, for better or worse, notice or care about these sort of things. So the handbag might cost $3k, but it might just be the cost of doing business with a customer that brings in $300k of revenue.

    That’s perhaps a contrived scenario, but just trying to point out that it’s not always so easy to say in absolute terms that money should be spent on X and not Y.

    These types of questions are some of what we try to make sense of at http://www.TheDollarRule.com

  39. Andrew says:

    Firstly, to everyone who keeps claiming that purchasing a $3000 handbag is a crime. That could be said about almost ANY purchase. Not buying the cheapest car possible, not buying the cheapest house possible, not buying the cheapest clothes possible. Buying any frivolous items whatsoever. The same could be said for all of those. Why would you buy silverware, that is immoral, you could spend that money on charity. That may sound ridiculous, but that is more or less what you are saying. As much as I think charity is a great thing, forcing people to do it is communism, and thats just not right. If you work hard for your money, and your not in debt, and you love expensive purses, what is wrong with that? I mean, I personally think its a bad choice, but I think that if someone else wants to, that is there business, not mine.

    As for hybrid cars. The MPG on most hybrid cars is in the low 30s at best. Even the Pris is lucky to reach 35mpg with normal use. If an exceptionally good driver is driving in optimal conditions they can reach high 30s but thats about it. Most hybrids only get around 30-35MPG which is the same as what you get with an average 4-door sedan. My Ford Focus gets 32MPG in town. My friend has an old Chevy Cavalier that gets almost 40 on the highway. The main problem with hybrids is that they have so much extra weight in the form of batteries. They way about 500-800 pounds, and thats a lot. It seriously hinders your average MPG. In other words, Spending $6000 extra on a hybrid is just a wasteful as spending $3000 on a purse; its only a conversation piece. Hybrid technology is not as advanced as it needs to be yet. And this is not coming from just some random guy either. I’ve actually worked on designing and building a hybrid vehicle, and know a lot of guys designing one to compete for the X-prize.

  40. Chris K says:

    “Does a person have an exclusive right to do whatever they want with the fruits of their labor?”

    Yes, they have the right to. But just because something is a civil right, doesn’t make it “right.”

    $3000 is ridiculous for a hand bag. There is a difference between buying a long lasting, nice looking handbag, and a gross excess. There is absolutely no reason to spend that much money on something so trivial as a handbag. The extra thousands of dollars one spends on such a thing is NEVER a good financial choice and always a selfish ego booster and show of wealth.

    People can do whatever they want with their money in our system, but buying more than one needs is selfish and there is no denying that.

    The amount of happiness $3000 can bring to oneself , those in need, and the cause the world completely dwarfs the fleeting, false, materialistic happiness of a luxury designer bag.

    There really is no excuse besides selfishness.

  41. Carrie says:

    (tongue in cheek) I think that we should condemn people who waste massive amounts of time watching television or engaging in recreational activities instead of volunteering because they’re enjoying themselves while ignoring the suffering around them.

    I would never, ever profess to think that I know how best to spend someone else’s time or money. It’s their money and their time, and it would help greatly if we focused on managing our own lives and not judging other people’s. BE the change you want to see in the world.

  42. Anna says:

    Back to the “buy one, get one” discussion: The original blogger was not very smart and discussed this strategy in a very superficial way. The result was a post that was practically useless. I get good value on BOGO purchases all the time.

    1. I compare the single-item price in a BOGO with the usual single-item price, and buy only if the result is favorable and if it’s something I would use anyway.

    2. I buy only what will keep or can be stored in the freezer, such as cans, frozen veggies, frozen fruit.

    I would hate to see anyone pass up a useful money-saving device on the strength of that original post from the wisebread web site.

  43. William says:

    Sorry but IMO there is no justification for a $3,000 handbag. It is a BAG! Only the vain and irresponsible buy such things.

  44. Keith says:

    Vartan said: “I have to very strongly disagree with the premise of your article here. The reason why it’s bad to buy a 3,000 handbag should not be purely financial, I would say it’s downright UNETHICAL, regardless of whether or not it increases debt or whether you can afford.”

    Vartan said: “…I think what we need to move away from here is the assumption that people can simply do whatever they want with whatever is theirs and that we have no right to judge that.”

    Trent said: “Here, you get into the classic “capitalism versus socialism” debate, which actually turns into a civil liberties debate. Does a person have an exclusive right to do whatever they want with the fruits of their labor? That comes down to a personal value answer, because there is a compelling argument on each side of that question.”

    I fail to see the “ethical” issue raised by Vartan. Taking it a step further, it is not even a moral issue how one spends their own money.

    Do you hold the same view of someone who gives away say 95% of their income or wealth and still buys a $3,000 bag because it is still a drop in their financial bucket? Taking it down a level, is it unethical for someone to go out to eat instead of cooking at home? That person could theoretically cook at home and give the difference to the needy. Is the true answer to be horrified and condemn those around us who choose to get the best utility (in their own view) from their efforts? Where do we draw the line of what is acceptable and what is “unethical?” Who is going to be the moral police? What happens if someone views what you are doing as unethical, even if you don’t see the problem?

  45. leslie says:

    On the handbag argument: I bought a few bags at Kohl’s a few years ago when they were having a 30% off sale, mainly because of the cheap price. The bags came to $6-15 each. Of the three I bought, within six months two had already broke/ripped thus rendered useless.

    To replace them, I went to Macy’s and bought one $85 purse that I loved in the store. After two years, this bag hasn’t failed me yet.

    Really, this evens out with the 6 Kohl’s purses I am sure I would have went through in that same amount of time.

  46. Carrie says:

    Can we lay off the handbags and start poking fun at, say, boats or planes or stupidly expensive watches or sports cars? Those are just as frivolous and much more expensive, yet no one seems to be criticizing those nearly as much.

  47. Sarah says:

    I’m amused by how all of the visceral “OMG $3000 for a purse is just wrong!” comments appear to be coming from men. If we change “purse” to be “plasma TV,” is that worse or better?

    I also think that the $3000 figure is a bit misleading as there are not very many purses out there for that price. A better estimate of what normal working people pay is in the range of $500-$1000. This is still a gross amount of money, but it’s fairly standard for retail of a high-end, quality leather bag.

    I’m not a handbag person, myself (shoes are my weakness), so I agree with the boggling over paying so much for a bag. I’m positive, though, that I would find something that other splurge on equally ridiculous.

    As for the person who implied that any item bought beyond basic necessities is wrong because the money should go to charity, I will reiterate what all the other responses have been: No. Just no.

  48. justin says:

    Thats a good point Carrie. I think a $3,000 handbag is ridiculous, but what about all the people driving a new $60,000 corvette???

  49. Carrie says:

    Or motorcycles. My neighbor has two $20,000 bikes. I will never understand motorcycles. To me, they seem to be expensive AND dangerous! Yet I haven’t seen anyone criticize those either.

  50. Keith says:

    “Thats a good point Carrie. I think a $3,000 handbag is ridiculous, but what about all the people driving a new $60,000 corvette???”
    justin @ 10:09 am June 12th, 2008 (comment #48)

    I don’t see a problem with driving a $60,000 corvette or two $20,000 bikes (not at the same time of course) if your income supports your choice. Dave Ramsey touts not having motorized vehicles equalling more than 50% of your income. If you have a $60,000 corvette and this is your only motorized vehicle, then as long as you make at least $120,000 per year, you fall within that rule of thumb. If you have a $60,000 corvette and two bikes at $20,000 each, then your income should be $200,000 per year.

    What I don’t agree with is making payments on a $60,000 corvette or two $20,000 bikes. My personal belief and part of my frugality takes its form in paying cash for everything, except houses. I view it as very frugal to drive a car into the ground while saving up for something you really want…like the $60,000 corvette, although you may not want to spend the $60,000 on a new corvette and instead opt for a 2-3 year old corvette to reduce the hit on depreciation.

  51. Jules says:

    @ Vartan: read Ayn Rand.

    As for whether I would purchase a $3000 handbag, the answer is no: because a $3000 handbag would not make me happy. I would, however, gladly spend $3000 on a spotting scope so I could catch wading birds and other wildlife. It’s just as frivolous and just as selfish, and probably even more useless than a handbag, because I can only go birdwatching about once a month.

  52. michael says:

    @Carrie:
    My $12,000 motorcycle (the only vehicle I own) gets 50+ mpg, and the insurance is $300 per year. Not exactly expensive, even if you double the sale price. In the 4 years we’ve both had our vehicles, I’ve paid thousands less than my gf has for her $11,000 used Accord.

    Dangerous, maybe. But certainly not expensive if it’s your primary vehicle.

  53. justin says:

    @Keith

    Believe it or not, one day we will all be held acountable for how we spent our money.

  54. Keith says:

    “@Keith
    Believe it or not, one day we will all be held acountable for how we spent our money.
    justin @ 3:00 pm June 12th, 2008 (comment #53)”

    If you are talking about stewardship, then I agree. Although, having your financial house in order and earning plenty of money to afford the finer things in life is not a sin.

    If one tithes, gives to the needy, stays out of debt, increases their holdings with interest and protects themselves and their family from financial disaster, then stewardship is strong.

    Foregoing the simple pleasures of owning a few nice things does not make one a saint, nor does owning a few nice things make someone a sinner.

    Now, if the focus is soley to obtain those nice things at the cost of stewardship, therein lies the problem. Remember, money is not the root of all evil…The love of money is the root of all evil.

  55. thebaglady says:

    I spent $3000 on an HDTV as a wedding gift to my hubby when we got married. I had the money for it and it made my husband very happy. It was also sort of a gesture to equalize the fact that he bought an engagement ring. Though I think the TV is a much more practical wedding gift since we play games on it and watch movies. It was the most expensive thing I ever bought on my own, but I guess it is worth it since we can enjoy it for quite a while.

    Oh btw thanks for the link to my article on Wise Bread :)

  56. Suzy says:

    Regarding the hybrid link–
    I am mathmatically challenged, but I cannot figure out the graph. First, how many litres is in a gallon? And second, what is the assumption the author is making about the annual mileage? This is critical. If you drive only a few thousand miles per year, then a hybrid may not be worth it. But if you drive a lot, then the hybrid will more likely make sense. I also agree that the sales prices seem off base. I just bought my 2007 Civic hybrid last week for 21K. I love it, by the way. It is more car-like than a Prius (which I liken to a microwave), and it doesn’t have that “weird Prius smell.” I still can’t figure out what that’s all about.

  57. justin says:

    Mat 19:21 Jesus said unto him, If thou wilt be perfect, go and sell that thou hast, and give to the poor, and thou shalt have treasure in heaven: and come and follow me.

    Act 20:35 I have shewed you all things, how that so labouring ye ought to support the weak, and to remember the words of the Lord Jesus, how he said, It is more blessed to give than to receive.

    Mat 6:19 Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal:

    Mat 19:24 And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.

  58. Keith says:

    @justin
    I fully agree with those passages and reiterate…

    Having your financial house in order and earning plenty of money to afford the finer things in life is not a sin. In fact, every one of those passages supports this assertion.
    “The wise have wealth and luxury, but fools spend whatever they get.” Proverbs 21:20

    If one tithes, gives to the needy, stays out of debt, increases their holdings with interest and protects themselves and their family from financial disaster, then stewardship is strong. Again, all of those passages support this assertion. “A slack hand causes poverty, but the hand of the diligent makes rich. He who gathers in summer is a prudent son, but he who sleeps in harvest is a son who brings shame.” Proverbs 10:2-5

    Foregoing the simple pleasures of owning a few nice things does not make one a saint, nor does owning a few nice things make someone a sinner. Is it not better to increase wealth to better be able to affect more lives? It would be more of a sin not to increase personal wealth if you are inclined and have such abilities. Squandering opporunity (sloth) is one of the 7 deadly sins. If you are able to earn $1,000,000 a year, should you opt to make less in an effort to seem more rightous? Perhaps you think that you should give away most of that $1,000,000 a year and live on as little as possible. That would be very short thinking, for if you have talent or opportunity to grow that money into greater amounts you will end up helping many more people than if you just give it away. Proverbs 28: 8 “He who augments his wealth by interest and increase gathers it for him who is kind to the poor.”

    “A slack hand causes poverty, but the hand of the diligent makes rich. He who gathers in summer is a prudent son, but he who sleeps in harvest is a son who brings shame.” Proverbs 10:2-5

    “The wise have wealth and luxury, but fools spend whatever they get.” Proverbs 21:20

    If the focus is soley to obtain those nice things at the cost of stewardship, therein lies the problem. Remember, money is not the root of all evil…The love of money is the root of all evil.

    I personally find that the more I give the more I receive…spiritually and monetarily!

  59. Sarah says:

    Justin, I’m not sure the last quote is a good one. If someone buys a $3000 purse and goes into debt, they will not be rich. Considering this is a personal finance site, that quote is really out of place.

    As far as quoting the Bible goes, I think that it should not be something you read literally. For example: consumed shrimp, shellfish, or bacon lately? Played football? Come into contact with a woman on her period? These are all things, according to Leviticus, that you should not be doing. Follow one, follow them all.

  60. justin says:

    Psa 119:160 THY WORD is true from the beginning: and every one of thy righteous judgments endureth for ever.

    The Old Testament laws were written for the Jews. In the New Testament Jesus came to overcome the Law.

    Rom 10:4 For Christ is the end of the law for righteousness to every one that believeth.

    Please check out….
    http://www.thywordistrue.com/

  61. justin says:

    2Ti 3:16 All scripture is given by inspiration of God, and is profitable for doctrine, for reproof, for correction, for instruction in righteousness:

  62. Joanne says:

    What I love is that Justin quotes from the New Testament and Keith quotes from the Old Testament (I suppoe Keith is some sort of “prosperity gospel” adherent…lame). Children, the real moral of this story is that the Bible is self-contradictory, written by bronze-age thugs (the Torah, that is), and not worthy of quotation by adults. But please remember the famous tenth commandment: “Don’t boil a baby goat in its mother’s milk”. Live by that rule, I dare you.

    Also I just love how the main critics of the $3K handbag, as Sarah writes, are men. Men waste money or different things than women; but boy oh boy, do they waste money. Expensive car? What a waste. Much more than $3K worth of waste, too. Wreaks of sexism.

  63. Joanne says:

    What I love is that Justin quotes from the New Testament and Keith quotes from the Old Testament (I suppoe Keith is some sort of “prosperity gospel” adherent…lame). Children, the real moral of this story is that the Bible is self-contradictory, written by bronze-age thugs (the Torah, that is), and not worthy of quotation by adults. But please remember the famous tenth commandment: “Don’t boil a baby goat in its mother’s milk”. Live by that rule, I dare you.

    Also I just love how the main critics of the $3K handbag, as Sarah writes, are men. Men waste money on different things than women; but boy oh boy, do they waste money. Expensive car? What a waste. Much more than $3K worth of waste, too. Wreaks of sexism.

  64. justin says:

    Joanne,

    There are no mistakes in the KJV Bible. I’ll give you one thousand dollars if you can prove one.

    http://www.thywordistrue.com

  65. SavvyD says:

    $3,000 for a hangbag? Well, some people actually do value the designer label. I feel so gauche when the most I have ever paid for a bag is $200–and that was Calvin Klein. I actually get alot of compliments on it. The truly high-end couture bag you are hypothetically speaking of is probably really ugly and I would laugh at the girl who bought it. She would probably laugh at me for getting last season’s Marc Jacobs at 60% off on the sale rack or wearing last season’s Calvin Klein dress. Outrageous prices are why there is that handbag rental company that started.

    In any case, as materialistic and ridiculous as I might think it is, that handbag pays the salary of the pattern cutter or bag seamstress who get paid $10 an hour and live in Manhattan with 3 other girls in a loft. I knew one of those girls when I lived there. So, if you think about it that way, you are helping girls who dream of making it big in fashion. And that’s not all bad!!

    http://www.SavvySingleChristian.blogspot.com

  66. Keith says:

    Joanne said:
    “What I love is that Justin quotes from the New Testament and Keith quotes from the Old Testament (I suppoe Keith is some sort of “prosperity gospel” adherent…lame). Children, the real moral of this story is that the Bible is self-contradictory, written by bronze-age thugs (the Torah, that is), and not worthy of quotation by adults.”

    Most reasoned adults don’t need to resort to ad hominem attacks unless their position is so weak they have no other option(s).

    Just for the record, I have no affiliation and don’t fully agree with “prosperity gospel” teachings or any specific organized religious doctrine. I most closely lean toward Presbyterian doctrine, if that even matters.

    My point was that the Bible does seem to waiver on numerous issues and many people misinterpret, misapply, take out of context or hold fast and true to the “letter of the law” rather than the “spirit of the law.”

  67. justin says:

    Just because some people have a hard time understanding the Bible, doesn’t change the fact that its all true. (the kjv)

  68. Roger says:

    Trent, on the issue of Webkinz (which doesn’t seem to have gathered much in the way of comments), have you looked into the Neopets site (www.neopets.com)? It’s been a few years since I’ve been there regularly (not since my college days), but it had several of the features that clever_dude was hoping for in Webkinz, such as:

    -A bank where extra currency (‘neopoints’) could be stored, in an interest-gathering account.
    -A mock stock market, where stocks in various (fictional) companies can be bought and sold.
    -Various ways to give to charity.
    -And, although not mentioned by clever_dude, the possibility to create your own shop, and sell (or more properly, resell, since there’s no way for an individual user to produce new items) items to other users. This feature alone could be a halfway decent Econ 101 course for the grade school set.

    Now, the site isn’t without its problems; it is, at its heart, one giant commercial for the large (and ever increasing) amount of related Neopets merchandise. But, even that could potentially be a lesson: the cost of getting something for ‘free’ is usually allowing yourself to be subjected to advertisements (and hopefully, resisting the urge to buy everything you see).

    As for the $3000 purse issue, while I can think of plenty of other things ‘I’ would rather do with that amount of available money (some rather tempting Vanguard funds come to mind), trying to dictate what others should and shouldn’t be buying seems like a fruitless task, to say nothing of making you very unpopular at parties.

  69. Raffaella says:

    Fighting poverty is often about sacrifice – giving up something for the benfit of others – there’s only so much to go round.

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