At the Dollar Rule we're not content to analyze smaller purchases like iPods or movie tickets. We want to see how well (or poorly) the Dollar Rule stands up against even very big ticket and infrequently purchased items.
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In the Dollar Rule vs. the Movies, we discussed that going to the movies theaters may not always be dollar-worthy, since getting to a DRR of 1.0 for what movie tickets cost is hard to justify. Do you get $7.50 - $12 worth out going to a movie?
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It's a sure sign of getting older, whenever you start to think "In my day, X only cost Y dollars." That's what it seems like when you go to the movie theaters now.
But say it I must. What the heck is with ticket prices now at the movies? Didn't they used to be a nickel?
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As the U.S. economy continues to degrade, many people are increasingly becoming aware that the much beloved cable (or satellite) TV really does take a chunk out of your budget each month. $70-90/month might not seem like a lot (especially when gas is $50 a tank), but it easily adds up to over $1000 at $90/mo (equivalent to a new laptop or large plasma TV each year for that). Even the most basic cable packages are usually $45-50 a month.
So let's apply the Dollar Rule to a $70/mo cable bill. $70 per month means we'd have to use the cable service for around 70 person-hours a month, or 2.3 person-hours per day on average, to reach the break-even DRR of 1.0. Using your cable for several hours a day probably isn't much of a stretch for most families, especially if you have kids. Even for single folks, a couple one-hour TV episodes would cover that relatively easily.
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Although we've applied the Dollar Rule to various example purchases (like the Nintendo Wii Fit, baby gear, and laptops), let's take a more critical look at the Dollar Rule itself.
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I recently heard Merlin Mann say on a podcast about a particular piece of productivity software, that even though the product was not free, "it owed him not a nickel".
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If you are a new parent (i.e., your first kid is <1 year old), we have only one thing to say: STOP buying all that new baby gear. At least wait until you read this article.
We're not talking about obvious consumables like formula or baby food. We're talking about all those big ticket items, that you think you need because of all the marketing hype and "safety paranoid" that they try to instill into new parents.
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One of our on-going series will pit the Dollar Rule against our own purchases to see how we spend our dollars. In this one we cover the very popular Wii Fit game for the Ninetendo Wii game console.
Along with thousands of other Ninetendo Wii users, we loved the idea of Wii Fit. Having played Wii Sports (the game that comes included with the Wii) quite a bit it was easy to see how this game console had the potentially to give you a real workout.
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We're going to do a little math now. But I promise it'll be simple. This is probably as mathematical as we're going to get with the Dollar Rule.
Because every purchase involves different prices and time of use, the break-even point varies a lot from item to item. It's hard to compare the break-even point of a toaster to a video game, or lawn service to basketball tickets.
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