A post on depreciation at Early Retirement Extreme got me thinking on the topic of depreciation. Never borrow for depreciating assets is a personal finance truism I've read more than a time or two.
As usual for me, my success with the big stuff has been minimal.
CARS: We used to buy used cars--believing the oft-cited "It depreciates by 20-30% once it's off the lot. We did the math on our used Camry and discovered that we had, in effect, paid for the first owner's depreciation! Desirable cars retain their value and don't depreciate as much as you'd think. We've bought two new cars: a 1998 Camry and a 2003 Civic Hybrid, both still chugging away.
With the small stuff, we've done well. Consumer goods depreciate immediately after purchase and basically retain that value...forever. Unlike the proprietor of ERE, we do not live a minimalist lifestyle. We love owning books and CDs and have a fashionista daughter.
BOOKS: We used to patronize wonderful used bookstores in the various university towns in which we resided. At the time, we thought 50% off books was great! Now, we rarely spend over $1.00, and that's for a hardcover. I guess if we wanted to have a yard sale, we could sell all our 25 cent books for 25 cents. But usually we donate them back.
CDs: These used to be a major expense, but swapacd.com (affiliated with paperbackswap.com) has been a blessing.
CLOTHING: Even fashionista college students can find most of what they want at a good thrift store (luckily, we have one). "Mistakes" can be donated back or--sometimes--swapped at the Buffalo Exchange, which has been around for years, but which we only recently discovered. Lucy Marmalade used credit garnered at the New Orleans store to buy a pair of Frye boots at the San Francisco store.
Oh, how we appreciate depreciation. Do you?