The Completely Consumed Increment, or How I Learned to Stop Worrying and Love Used Stuff

I’ve written before about how paying for quality can paradoxically sometimes be the cheapest option. In this guest entry, Handworn explains how his hobby — antique collecting — helps his finances.

Collecting made me an investor. I started by collecting coins. As I grew up and my interests changed, I had to do something with my collection. I sold it. My collection of coins became a collection of license plates and street signs on the walls of my room. This became a collection of old rhythm-and-blues 45s, and then a silver-hilted sword of the 18th century. That sword finally became fifty shares of the Aluminum Corporation of China.

After a sufficient number of items had passed through my life, after I had bought and sold and traded enough, patterns began to emerge. I saw that all expenditures of money are investments. All of them — each and every purchase, from a five-cent gumball to the ten-digit acquisition of a Fortune 500 company.

Every time you invest money, you are also spending the profits that you might have earned through better investments. But because we can’t predict the future, we can’t know what those better investments might be. Still, whenever we contemplate a purchase, each of us should ask: Is this a sensible investment? In most cases, it’s possible to tell. In some, it’s incredibly obvious.

“The business is in the buying.” — old antique-dealers’ adage
Liquidity is the final test of whether a purchase (an investment) is sensible or not. How much of your money can you recoup? In some cases, you can’t recoup any. Some things, like food, are entirely consumed. But when food is liquidated in the stomach, it grants the energy to work, which is what brings in money, so up to the point of luxury, food is a sensible investment.

A gym membership may be a sensible investment if used, given your improvement in energy, mood, and lifespan. But cable television or a night on the town is a consumable which is likely pure luxury. In both of these cases, the money is consumed completely.

For anything non-consumable, the principle of liquidity works even better. Can you resell a Walkman for what you paid? It depends on what you paid, of course. But you’ll get more of your money back if you bought it used. Every new product is a chimera: partly non-consumable, partly consumable. (Mostly consumable, in fact.) Buying things used, free from the flash and glitz and group social acceptance that Madison Avenue has lured you with — the completely consumed increment, let’s call it — establishes the true value of an item.

The value of used products is described by an inverted bell curve. The value goes down, down, down, and then, if they’re not rotting in a landfill, it goes up, up, up, because they’ve become antiques. Which I now collect.

Why antiques cost less than you think
Antiques are the ultimate used product. They can’t be packaged well, in the advertising sense. Source, supply, and condition of any particular item is never reliable. Without the areas of certainty to which Madison Avenue is addicted (and to which it has encouraged people in general to become addicted), the field of antiques is left alone, uncluttered by advertising-induced group behavior.

Imagine you’re at a local estate auction, looking at a handsome turn-of-the-century Mission library table much like the new one your friend bought for $250 at Target. The real one at the auction might cost you $550. (Or, not infrequently, $150! The market is mercurial.) But this higher price is deceiving — the key is to focus on what you get.

Now imagine that, two years later, you and your friend each move into smaller houses. You do him a favor and, with yours, take his library table to the auction house to resell. Suppose his table brings $25 and that yours brings $550 again, or $450 after the fees of the auction are deducted. You’ve lost $100, but your friend has lost $225 because his table is only “used”. (If you paid $150 instead, you would have actually earned $300.)

This happens with antiques. It never happens with new furniture. Remember that newness, that completely consumable increment? It’s a hidden cost of buying things new.

Beware the completely consumed increment
The completely consumed increment is like water on pavement, finding every crack and crevice. It has no greater ally than society, than interpersonal relationships. High finance and formal investments are no barrier to it.

• In real estate, it takes the form of new houses, or tony neighborhoods, or glossy magazine advertisements for fancy kitchens.
• In stock, it’s the penny stock spam, the hyped mutual fund with high costs, the over-inflated expectations for a company that can’t possibly grow at the promised rate.
• It’s anyplace that showmanship convinces you to buy for the wrong reasons, where a confident, polished presentation gets you to substitute the advertisers’ judgment for yours.

Popular culture depends on profitable conformity. Retreat from paid happiness. Have faith that the real thing will fill the vacuum. You will save money in direct proportion to how little of the completely consumed increment you buy.

Thanks, Handworn. What about high-quality furniture? If I scrimp and save to purchase a new Stickley bookcase, will it hold its value? Or am I better off buying an antique? (And how do you buy antiques? That’s a topic for a future entry.)

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This article is about Choices, Shopping