While having one of those “here’s why you don’t have a cell phone yet, honey” with my daughter, I explained that the “add a line for only $9.99” marketing gimmick is a myth. There are so many charges other than the $9.99 charge: fees for this and fees for that. “There are always hidden costs that the retailer never tells you about,” I explained, “There are costs associated with using, obtaining, maintaining, and upkeep that aren’t publicized.”
That got me to thinking about other ways there are hidden charges for the items we buy:
The phone may be free or reduced cost, but without the monthly access fee, it’s pretty much a paperweight. Just as a car without gasoline is worthless, there are usage costs that evade the thinking process for many people. Taxes and fees for cell phones, tag costs, maintenance costs, the costs of tires and insurance for vehicles.
Hidden costs are difficult to anticipate. Just tell that to a friend of mine who’s daughter ran up over $700 in text messaging fees during a week long cheerleading camp! A doughnut’s calories may be a direct cost to your quest for better fitness, but it’s consumption may set you on a slippery slope that leads to a lack of self discipline. A video game player may cause you to lose focus on your quest to make extra money and that is a cost as well.
Anytime something saves time, it will almost always cost more than the time consuming alternative. Compare eating out to preparing foods at home. Compare a pressure washer cleaning your deck, versus using a scrub brush. Compare a microwave to a pot. Compare driving a car to walking. Whenever we insist on using items that save time, they almost always cost more.
Most of the time, these costs are used in a business setting to explain the cost of getting new customers, but there are acquisition costs for consumers as well. The cost of shipping, the cost of Realtor fees, the cost of driving to the store, the cost of the research you performed to reach the decision to buy that particular brand.
Most items have a specific life, but when we buy lower quality tennis shoes for our kids, we soon realize that they last less than one third the time that the better quality shoes … at only a 20 percent savings. Buying quality allows us to avoid depreciation costs. Depreciation costs really come into play when you’re making large purchases, such as carpeting, appliances, vehicles, or windows.
Buy a $1,200 MacBook with cash from your savings account and it costs … well, it costs $1,200. Buy it with your credit card and make only the minimum payments at 20 percent interest and it’s cost balloons up to $2,380.
It’s better to pay full price with cash, than to buy at a discount and finance it for 10 years.
Before making a purchase decision, make certain you evaluate all the costs.