The True Cost of Ownership: Luxury items

Who knew romance would lead to insurance?

I’m introducing a new series here at Your House Machine, all about the hidden cost of owning things: The True Cost of Ownership. We humans have so many blind spots, so many cognitive biases, and are so skillfully marketed to in a Capitalist society. It’s a recipe for overconsumption. I am far from immune myself, and much of the work in this newsletter is me questioning my own actions in an effort to deprogram my brain. Join me, won’t you?

Let’s talk about expensive jewelry.

I’ve always prided myself on my “non-materialism.” I love a deal. I used a ziplock bag as a wallet for years. Why put money into a fancy wedding when you could be saving for something practical like a house down payment? When it comes to symbolic jewelry, why buy a $4,000 ring (for example) when a $40 ring can do the same job?

Not my ring FYI. Photo by Jeremy Bishop on Unsplash

But then I discovered Mociun, a Brooklyn jeweler with delightfully unconventional designs. I started following them on Instagram (BIG MISTAKE) and fell in love with a custom ring they made for someone.

When I got engaged I knew I wanted a ring just like that. I downgraded it from a diamond to a sapphire (see, I’m reasonable), but it still would be my most expensive single possession after my house and car. There are so many reasons why I disagree with the concept of engagement and wedding rings (feminism, capitalism, etc etc), but I’m not made of stone. They’re pretty and I wanted one damnit.

So we had the ring made. I loved it and continue to love it.

Around the same time, I was purchasing homeowner insurance, and the agent asked if there were any high-value items I wanted to list on the policy (you have to separately identify high replacement value items, turns out). So of course I had to add my most expensive possession.

This added about $100 to my annual insurance cost. Ok, whatever. I paid it for a couple years before it struck me:

What am I doing paying an annual TAX on my engagement ring? The ring was already expensive, so why I am I incurring more costs in perpetuity just for owning it?

If my ring were lost or stolen, I don’t actually require another equally expensive ring to replace it. Any replacement would be less special than the original ring, so I could just get something affordable and pretty. And if I don’t lose the ring, then over the course of my life I’ll be paying way more than the cost of the thing to insure it.

I’m a big believer in good insurance generally. I totally understand spending extra to insure things that are essential to your life, like a fancy camera if you’re a professional photographer. But a random bauble? Talk about expendable!*

I called my agent and asked them to remove the ring from the policy immediately. I’m so glad I came to my senses.

There’s More

This is a very explicit example of how owning expensive things continues to exact a (literal) cost. But there are other subtle ways expensive items cost us even beyond the initial purchase:

• Maintenance — “My fancy car has to go to a special mechanic and takes only premium gas. This camel hair coat requires dry cleaning.”

• Worry — “Don’t let the kids get near my priceless work of art! I must be forever vigilant.”

• Sunk Cost Fallacy — “I spent SO MUCH on this item, I can never ever sell it because I’d never recoup the cost. Thus I will take it to the grave.”

• Additional Costs — “I need a house big enough to fit my X collection, so I’ll spend extra to get the space. In addition to a higher housing cost, I’ll pay more in property tax and insurance too.”

And on and on.

This is not to judge anyone’s expensive purchases. My goal is to make explicit that there are costs we don’t always consciously recognize. The idea is to factor in these “hidden” costs along with the price tag when you’re considering a high value item.

I’ll share an example every now and then for this series of the hidden cost of ownership, but please feel free to share your examples and thoughts in the comments!

*No shade if you pay extra to insure your jewelry—truly. For me it’s not a priority, but for someone else it might be a completely worthwhile investment and impart peace of mind.

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