Collecting – Not Great For Your Budget

If there’s one thing I’ve noticed, it’s that people love to collect things.  Books, stamps, Precious Moments, you name it, someone is out there collecting it.  I’m no different, I used to be quite proud of my DVD collection.  But as I boxed it all up to sell to a local Buy/Sell/Trade store, I realized, there must be over $1,000 of money spent on these items that are now almost completely worthless (I got $10 for about 20 of the DVDs, and the rest they didn’t want at all).

Just imagine instead that I had invested that thousand dollars, and simply rented a DVD when I wanted to see the movie?  Ironically, around the time I was buying these DVDs, Netflix went public.  If I had invested that money in Netflix (and then added another $1000 in one of it’s drops), I would have $400,000 now.

While I think collecting things is a fine hobby, I have two recommendations.  First, if you have any debt whatsoever, you should not be spending your own money on a collection of any sort.  From things as simple as buying a book, to owning a DVD, there is almost no point in owning something that is depreciating in value when you have debt.

Ok, well what if you don’t have debt?  Collecting things can be a fine pastime/hobby, but in general it’s still not the smartest way to spend your money.  There are a few exceptions, after all some collections actually appreciate in value, like coins, stamps, even retro video games, however the odds of you getting in at the right time and them staying appreciating is lower than if you just invested in a diverse variety of stocks.

Owning collections also requires storage space (which could mean more costs like a storage unit, bigger house/apartment, moving costs), insurance (if your collection is valuable), and stress.  Take a look at what you are buying and make sure your enjoyment of that collection is worth the opportunity cost of putting your money elsewhere.

“Spend what is left after saving“

Warren Buffet

Sign up for our Newsletter

* = required field