Necessity vs. luxury vs. investment

I was reading this thread and got to wondering about the different priorities people have for spending their money. Stuff some people consider necessities, I consider luxuries, and stuff other people consider luxuries, I consider investments.

Take cable, for instance. A lot of people see it as being really, really important, but to me it’s like shoving a $50 bill down the garbage disposal. We barely even turn our tv on (usually, when Dr.J wants to watch The West Wing, he doesn’t even have to change the channel, because the tv hasn’t been on since we watched ER the previous week.) I’ve had cable a couple of times in my life, and while it vastly increases the quantity of tv I watch, it certainly does nothing for the quality. I’d have to put cable solidly into the luxury category.

I had a cell phone for a while, because it was the cheapest way to get my long distance when I was making a lot of in-state, out-of-area-code calls. At that point, the cell was an investment. Some people need them for work, or for security reasons when driving a lot. For those folks, they’re a necessity. But for the folks who just can’t bear the idea that they might miss the opportunity to share such breath-taking insights as, “Oh, I’m grocery shopping. What are you up to?”, a cell phone is definitely a luxury.

A car is another of those things that vary by circumstances. Everyone needs a way to get where they need to go reliably, so in a lot of cases a car of some type is a necessity. Ditto for transporting things and people you regularly need to transport. Spending more money for a car that will keep running longer with fewer problems, that’s an investment. Spending more money for a car that’s bigger (when you don’t actually need the room), flashier, faster (when you’re not a race-car driver), or cooler is a luxury.

Having your nails done, or your hair professionally colored? Unless it’s a requirement for your job (or your job depends on your appearance enough that you can’t afford screw-ups), it’s a luxury.

Having household help is something a lot of people consider a luxury, but I consider it an investment in my sanity and my marriage. Getting someone to come in and help out every other week has saved us all kinds of stress and acrimony. It means that when we’re both working schedules that leave us feeling like we’ve been run over by 18-wheelers, we don’t have to choose between killing ourselves trying to keep up with the house or living in squalor. We don’t have blowups over who was supposed to do what, and who left what lying around, and who’s not pulling their weight, and all that other stuff. That means that our limited time together is much more pleasant, and that’s healthier for us and our relationship. Masako’s cheaper than marriage counseling, I’ll tell you that much.

Our kitchen stuff is something else a lot of people would consider a luxury. Dr.J has a lot of nice kitchen equipment that was fairly expensive, and he’ll be the first one to say that it’s a bit of a splurge sometimes. Still, though, I look at it as an investment–it’s all good, solid stuff that will way outlast the cheaper stuff, and a lot of it means we eat better with less time and effort.

So, where do you Dopers draw the line between necessity and luxury, and between luxury and investment?

Hmm well I used to buy LOTS of dvds and cds, many that I end up not watching/listening to more than once.

So now I rent before buying and buy ONLY if the movie is quite exceptional and I sample cds off of the net before deciding to buy. Now I’m saving myself a lot of money by limiting my spending to the things I REALLY enjoy, and not for instance, ordering a dvd called Sex & Zen from Amazon.ca just because it has a hilarious 5 minute scene of flying sex Kung Fu in it (okay okay I did actually buy that one).

Those are just a few examples, now I’m much more happier financially with nearly zero-debt and I can afford to take a trip to Vegas in a few weeks. Whoo hoo!

Took a long time for me to distinguish between necessity and luxury though, but its a lesson I’m glad I learned.

Luxury - living close to work, when I could save a lot by putting up with a bit of a commute. I’m moving 35 miles away shortly, and cutting my rent in half (for a far better place).

Necessity - cell phone. If I’m careful I can communicate in the car with everybody I need to, for $29.99 a month. Saves time too.

Luxury - new clothes at a nice store. I buy most of my clothes at Goodwill; you’d be amazed if you haven’t tried it yet. I’ll take advantage of sales at stores like Penney’s and Sears.

Necessity - dry cleaning. I do quite a bit of my own laundry, but I can’t iron a shirt and at 85 cents a day, 3 or 4 days a week (I don’t have to wear dress shirts, and certainly not on friday) it’s totally worth it. You have to consider how much your time is worth sometimes.

Luxury - lunch out in a restaurant, with something to drink, maybe an appetizer, and tips.

Necessity - lunch at the supermarket deli. The poorer I feel, the less I do even this, but most of the time, for less than $5 it’s money well spent. Gives me more sleep and less frantic mornings.

I hate to judge another’s spending habits. Ultimately we all buy what we individually need or want, and we all pay the price that’s required.

No offense CrazyCatLady, but your analysis of your situation doesn’t really hold up. You mention anything in your situation that might be a luxury is really an investment, and therefore can feel superior because you do not “waste” any money on luxuries. Investment to me is putting money aside every month into a retirement savings plan.

I’m not going to criticize your spending habits. That is none of my business. But people who spend their money on what you call luxuries probably see them as investments because, by your criteria, it makes their life better.

Note: I have no respect or time for people who want to file for bankruptcy solely to absolve themselves of debts that they got themselves into with their full knowledge.

Interesting thread. For me:

Cable: more or less a necessity. Where I live there is NO TV except for cable - that is, if you just plug a TV in and use an antenna, you won’t get any channels. I guess if things got really tight I’d give up the cable - I’m not that much of a TV watcher to begin with - but in my mind the $40/ month we spend on it is well worth getting “Queer Eye for the Straight Guy” and “The American Experience.”

Car: Having one car between the two of us is a necessity. We work at home, so one car is more than enough. I don’t live in an area with good public transporation. If I want to get groceries, I need a car. HOWEVER, the can-only-use-in-summer not-enough-space-for-a-bag-of-groceries convertable in storage in our small garage is a luxury. The 4 wheel drive Xterra is the necessity.

Cell phone: We have two. Mr. Athena uses his as his work line. I have mine because it was cheap to add another one to Mr. Athena’s account. I rarely use it, and would be quite happy without it. So, 1 cell phone = necessity. Other cell phone = luxury.

In-home help: Somewhere in the middle. When we’re both working, it’s well worth the money to have the cleaning lady come in. When I’m not quite so busy at work, it’s a luxury.

Y’know, a lot of this depends on your economic level. Even the stuff I put down as necessities are stuff that could go if push came to shove. Really, all that is necessary is some basic food, clothing and shelter. Anything above that could reasonably be categorized as a luxury.

mske has a good point. What you define as a luxury, manicures, someone else might consider an investment, just as you do with housecleaning. An investment in feeling good about yourself.

OTOH, if one is unable to pay for necessities, one should cut down on luxuries AND investments. I have a portion of my paycheck taken out for company stock, it is a good investment. If I was unable to pay my monthly bills, I would stop investing and start paying my bills. I would lump investments with luxuries, in that they are not necessary for survival.

I consider necessities to be that which keeps your family in good health. Food, shelter, clothing, hygiene, basic health care, etc. Everything else, in one way or another, is luxury.

If you live in a small room with a mattress on the floor, one rickety chair, a milk crate for a table, and a transistor radio, you can get by. Will you have great fun at home? Perhaps not, but fun is what luxuries are for.

Oh, I’m not trying to feel superior to anyone. I fully accept that other people have different priorities and ways of looking at stuff. As one of my friends with kids put it, “That thirty minutes a day they’re watching Dora and I can have a shred of peace and quiet is worth everything we own.” For her, cable’s an investment. (Having been in her house, I’d say she’s somewhat undervaluing the cable, but that’s just me.)

There’s a lot of overlap between luxury and investment; about the only difference between them is whether the value something adds to your life is more than the price you pay for it. Which category something falls into is completely dependent on the situation and individual priorities. That’s what I’m trying to get a feel for, where other people’s situations and priorities lead them to draw the lines.

Car: At home, necessity. At school, luxury (and also useless, as I would have no place ot park it).

Cable: Luxury.

Internet (High Speed): Necessity. I have no idea how I’ll survive when I’m back on a modem for the summer.

Books: Luxury, unless it’s manga.

Anime: The basic necessity for survival ;).

Necessities are those things without which I die: food, water, shelter (gets cold and rainy round where I live sometimes.)

Investments are those things that make it easier for me to get necessities and luxuries: interest-paying financial arrangements, pension funds, and the like. Commodities that would (hopefully) increase in value would be investments, but I don’t own anything like that.

Anything else is a luxury.

I have a lot of luxuries.

I’d agree with gleeb.

I’ve been poor. A roof over my head. A way to get to my job (whether that was a car that ran or a monthly bus pass). Food. Heat. Those are necessities.

I get my nails done every few weeks. Costs a mint. Carry an expensive cell phone. Costs a mint. Housekeeper comes over twice a week - about the GNP of a small Central American country. Take pretty nice vacations. Eat out. These are ALL luxuries - but they are luxuries I choose.

I color my hair out of a box. Drive a five year old Subaru Forester. Spend maybe $500 a year on clothes. Car, clothes, hair (at least the color stuff) - These are not luxuries I choose. I don’t keep pets (too much work and money - used to have cats, don’t any longer).

I put the max into my 401k, as does my husband. He also has a deferred compensation account. We both get options at work. We put money every month into savings - to pay for things like cars and vacations. We put money away for the kids college. We pay down our mortgage faster than we need to - these are investments.

In another category, we always pay our bills in full each month. These are obligations.

If I had to give things up - if money got tight - first thing to go would be the newspaper (get most of what I need from the internet now), nails, club membership. Dining out would get cut back. I’d hang onto the housekeeper every other week as long as I could (but wouldn’t go into debt over it). Cable would be hard to give up for us, but it could be done. Fast internet would be late to go (and my work would pay for it, assuming I was still working there - my husbands work will pay for it - assuming he was still working). We’d eat out a lot less.