Should you buy the de-luxe model or the stripped-down economy model? Good Question!
A reader writes, discussing the purchase of a new television. The television business in the last few years has been interesting. In the old days maybe you would have a 19" black-and-white as the bottom-of-the-line set, sold for $99 at Sears. I know this as it was what my Dad bought at least three times during my childhood.
When we all left home, he sprung for an RCA Colortrack - 25" of color and only $500 or so in the basic cabinet. You could get fancier cabinetry ("Mediterranean Fruitwood" whatever that was!) and maybe a built-in record player, but that was about it. 25" was the largest they made the picture tubes. So the spread between the low-end and high-end was like 5X and the difference between a simple black-and-white set and a color set was a quantum leap.
Today, there is at least a 10X differential in prices. You can buy a 50" class of television for about $350, which I just did. It has all the bells and whistles, except something called "OLED" which is apparently the "plasma" of our generation (whatever happened to that?). You can go up in size a few inches and get slightly better resolution, but it will cost you. Not twice as much, not five times as much, but ten times as much if not more.
Is it worth it? Well, there are two schools of thought here - at least in my mind.
I once bought new computers for my office. We had a motley collection of PCs that I mostly built myself. Back then, computers were expensive and you upgraded and swapped parts to save money. But one day I was looking in the Dell catalog and saw that I could buy a brand-new PC with all the accessories, which was more powerful than any of the computers I already had, for $500 or so. I bought three.
They were not the "top of the line" machines, of course, but over time, my older machines had become obsolete and these were an improvement - for very little cost. Funny story, though, those machines had USB ports - a novelty then - which I never used as USB devices were few and far between. Years later I bought a USB device and struggled with getting the computer to recognize it. I called support and they explained that my machine had the early USB 1.0 standard port and it did not support 99% of the hardware out there. Interesting thought - you buy "state of the art" and it still is obsolete!
Years later, of course, the machines themselves were woefully obsolete. So this time around, I decided to go all-out. After all, I was sitting in front of a keyboard all day long, why not have the best? I called Dell, but they gave me the runaround, trying to sell me a "gaming" PC. I ended up with a Gateway PC with dual 22" monitors and a real IBM "surfboard" keyboard. It could even edit video! It worked well for many years, and I upgraded the RAM, and replaced and upgraded a hard drive. Since it was a high-end machine at the time, I think I ended up keeping it longer. By the time it was ready to be retired, however, it was considered to be woefully obsolete. One monitor died and then the motherboard went bad and since I was retiring anyway, I decided to switch to my old laptops - which are woefully out-of-date but I really don't care - at least for now.
So you could make the argument that buying the latest-and-greatest fully-loaded model will save money as you won't have to upgrade as often. And maybe that works for computers, but I am not sure it works with other technologies such as cars and televisions.
My experience with flat-panel televisions is that the prices keep going down (although I think they are leveling off in recent times). I paid I think $500 for a 40" screen here in Jekyll about 15 years ago. It went bad after about seven years and I replaced it with a 44" model for about $400. That lasted about seven years and I replaced it with a 50" model for $350. These things seem to burn out like lightbulbs and of course, they are not worth fixing even if you could find someone to fix it and get the parts needed.
And each set was a leap over the previous one in terms of features. The 40" model could display cable, antenna, DVD, VHS, and VGA. To stream, we had to attach a laptop to it. The 44" model could be linked to the Internet and it got two streaming channels - Netflix and YouTube. This 50" model gets every streaming channel there is and you can add new ones as "apps" to the main Samsung menu. So, larger, cheaper, and more features. Televisions are not a "buy it for life" item.
Sure, I could have spent more - well into the thousands. But funny thing, when you read complaints online, it is never about the cheap sets but the expensive ones. And the reviews always begin with, "You would think that by paying top-dollar that the set would last longer!" - classic buyer's remorse. If the $350 set bites the dust (as its predecessors did) I would just buy another one (if it was out of warranty). I've spent more on groceries or a meal at a fancy restaurant. $350 is no longer "a lot of money" and electronics today are disposable - so why pay a lot for them?
Not only that, but electronics in general depreciate to nothing in a matter of a few years. In fact, their value goes negative as often you have to pay to dispose of old electronics. Sure, you can spend over $1000 on a new smartphone, but within 2-3 years, they are selling for $199 or less, used, on eBay. "Oh, but I get my phone free as part of my plan!" - are people really that stupid? People spend a pile on these things and then get insurance on them - only to discover that when you drop your Apple iPhone XXXIV in the toilet, they only provide you with a "similar" model that has been "reconditioned" (i.e, used).
Myself, I am not worried about getting my phone stolen other than the hassle of replacing it. And guess what? No one wants to steal a $100 phone. There are advantages to being poor.
With cars, getting the "latest and greatest" in terms of electronics can be short-sighted. Our 2002 X5 had a cassette deck and two CD players. Really. A 5-disc "changer" in the back to play more music, and a data player for the "navigation" system which was woefully obsolete within a few years. In the armrest was a place for the built-in car phone. It was all obsolete or broken long before the car wore out. I ended up tearing it all out and replacing it with a Pioneer AVIC system (even got the steering wheel controls to work!) for less cost than I sold the old components for.
But who wants that hassle?
Today, people use their cell phones for navigation, which is often better and more up-to-date. Ford wanted $240 to "update" the database in our nav system - we took a pass. More and more people are using the cell phone for entertainment, navigation, etc. and all they really want in the car is a decent sound system and a screen they can project their cell phone to - a feature some manufacturers are removing from cars.
Electronics are a disposable commodity today, not a capital investment. Even the IRS recognizes this - allowing you to expense a computer for your business rather than amortize it. So in my mind, the best bet is to get the cheapest thing that meets you needs - provided it is of at least ordinary quality. Odds are, in a few years, it will be broken or obsolete, so why bother spending more?
With things like appliances and cars - which are usually targeted for a 15-year design life - getting all the options - other than electronics - might be a different matter. But even cars become obsolete over time. Cars of the 1970s have a hard time running on the fuels of today. On the other hand, do you want to be the guy who bought the car with the experimental engine or transmission - that blew apart right out of warranty? It rarely pays to be bleeding edge. Sometimes it is better to buy a cheaper car optioned-up than an expensive car.
Not only that, you have less to worry about with a less-expensive car. Sadly, a lot of Americans put themselves into hock to own a $100,000 car and then worry about it getting dented or stolen.
Of course, this isn't to say one should always go with the cheapest option. One reason I went with a Samsung TV and not a Vizio was the reputation of the latter plus the rumors of embedded ads in the firmware. That's how they make it cheaper, I guess.
They showed me one cheaper but I refused it!
