Saving Money Purchasing Computers

by Mr. Cheap

I have a very definite philosophy for buying computers. I tell it to anyone I meet who is planning a purchase, they all agree that it makes complete sense, and then none of them ever actually do it.

Computers drop in value quickly as we call know. They’re right up there with cars (except worse) in that you buy it and it starts depreciating quickly and immediately. This isn’t going to change in the near (or arguably far) future (I can post arguments backing this up if you want, but just Google Moore’s Law and you’ll get the basic gist if you don’t believe it).

Based on this, my philosophy has always been to buy the cheapest computer that will meet my CURRENT needs, and give myself permission to upgrade once I run in to ANYTHING I want to run that the computer can’t handle. Even if its fairly frivolous (such as watching videos with cutting edge video encoding or playing a new game). You will have to upgrade more often following this approach, but if you’re buying $1000 machines instead of $3000 machines the math still works out.

Say a cutting edge machine costs $2500. Six months from now, it’ll be the “budget beast” they’re selling for $600. Buying the high end machine will give your computer an added lifespan of 6 months. I usually get 3 years out of the low end machines I buy, so I’m paying ($600 / 36 = $16.67 / month). With the higher end machine, lasting the extra 6 months, you’d be paying ($2500 / 42 = $59.52 / month).

So clearly (even if you want to quibble about the numbers) we’ve disproved that paying more for a computer “so it will last longer” is a good strategy. Related to this is the idea “if I pay more for a computer, it’ll be higher quality”. It won’t. Computers are made with commodity hardware (it all pretty well functions the same way), and more expensive is usually just newer, not higher quality (some exceptions to this, but you can actually buy lower performance higher quality parts cheaper than higher performance lower quality parts).

The second argument people make for buying an expensive new machine is “it will let me do XYZ which the cheaper one won’t”. Often XYZ is something the cheap one WILL do (you can’t purchase a computer that isn’t powerful enough to surf, playing music and write e-mails). Unless you’re going to be doing video editing or playing the latest first person shooter game (3D games where you run around blowing other people up), you probably don’t need the latest and greatest machine. If you think you *MAY* want to do one of these processor intensive activities, get the cheap machine, find an older version of the software, and if you do use it and like it, then buy the more expensive machine (most peoples’ intentions are never followed through on, so paying lots of money to have a machine powerful enough to run software that you’ll never use is a waste).

I’m a computer nerd, work in the field, do a fair bit of programming and whatnot, and I’m using a 3 year old notebook (notebooks are less powerful dollar-for-dollar than desktops). A low-end new computer is more hardware than I need (although if its cheap enough I’ll take it), how many people are out that that honestly need more horsepower than I do?

The third argument, which no one ever says out loud, is that a new computer has bragging rights. Your friends come over to a dinner party and are interested in seeing the new Vista. Computer nerds will help fix your computer so you can send an e-mail, and admire how fast it runs. Bragging rights are great and all that (hell, how many expensive cars would be sold if not for bragging rights), but is it really worth an extra $2K to try to make people envious?

Next time you’re going to buy a computer, look at the one you would have bought, buy a cheap one instead, put the difference in a PC Financial bank account ear-marked as your “new computer fund”. When you run into something your old computer can’t handle, buy a new one out of that fund. I can guarantee you that the same amount of money will last you FAR, FAR longer than buying top-of-the-line would have, and after the first computer, you’ll be running a more powerful machine too (the second cheap one will be way better then the first expensive one would have been).

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{ 18 comments… read them below or add one }

1 Four Pillars

I’ve been guilty of paying extra for processing speed I couldn’t use however our last computer was a P3 for $100 which we bought this year. Admittedly not the greatest computer but it was a good enough replacement for a dead computer.

Mike

2 Mr. Cheap

Wow, a P3 this year. You’re the man! I’m shocked they charged you for it. You can get bargain basement new computers for $300 these days (without a monitor).

3 telly

Hmmm…just out of curiosity, I wonder what you guys think of this (as computer nerds)?

http://www.zonbu.com/home/

4 Mr. Cheap

telly: Looks interesting. Its based on Linux, so the big limitation you’re going to have is that you’ll be limited in the “out of the box” software you can purchase and run on it (e.g. you couldn’t buy Canadian tax software that would run on the box and the majority of games wouldn’t run on it). Its possible to get alternatives running on it, but unless its something they support, it would be a non-trivial task to get it running.

Basically, looks great for writing e-mails, surfing and word processing. If you expect to go very far beyond that, you might start running into its limits. Also, as much as it may work somewhat like Windows, there will be subtle differences that may bug you (and you won’t be able to get tech support from your ISP – if you had problems connecting this to your sympatico account, Bell Canada wouldn’t help).

It might be a fun thing if you don’t mind playing around with it to get it working (or know someone who’ll play around with it for you).

5 Canadian Capitalist

Who’s bragging that they have the latest and greatest PC? PC’s are just not cool. An Apple maybe but I’ve never heard anyone brag about their PC.

Seriously though, I couldn’t agree more not only about computers but pretty much any electronics. Witness how much prices have fallen on LCD TVs.

6 Mr. Cheap

CC: I must hang around a nerdier crowd than you 😉

7 Mr. Cheap

In a funny coincidence, Wooly Woman posted today about buying a new computer.

8 FourPillars

Telly – that computer looks neat.

The price is $250 which isn’t bad. The “service plan” which is probably a waste of money ups the cost to $411 (with a 2 yr agreement).

9 telly

Mike: Though I’m no computer nerd, I like the idea of open source (but would not have a problem with owning shares of Apple…).

I don’t think I’d go for it, but I like the idea of someone (or something) storing and backing up my data for me. We’re very bad about backing up our files yet we have >300G of data since we use a music server /streamer and sold or gave away most of the cds we’ve ripped. That would suck…

10 FourPillars

Telly you might want to look at an online backup service.

I bought an external hard drive and occasionally back everything up there.

Mike

11 NeverStopBuying.com

or only buy when there’s excellent deal, or price error.

bought before:
$649 Dell 640m (BIG price error)
$389 Dell AMD X2 Desktop with Vista, that’s “supposed” to end after 500 units, try 5000

On Sale now:
$399 Dell Vostro 200 Desktop with an Intel Core 2 Duo Processor E4400 (2.00GHz, 2MB L2 Cache, 800FSB), 1GB RAM, 250GB Hard Drive, 16x DVD Burner and Vista Basic

I agree, cheapest desktop works fine as long as you have expansion room (aka PCI-E slot, SATA slots, etc…)

Now, it’s a different story when you consider Apple iMac. They don’t start cheap at all, but I suppose they have bigger “Bragging” rights~

12 the Wealthy Canadian

Similar arguments can be used for many products.
e.g., Instead of buying a new Lexus sedan buy a used Toyota Avalon. Invest the difference in what you were going to pay. By the time you’re ready for your next car you’ve got the cash.

13 Mr. Cheap

WC: You’re right, but the difference is with computers isn’t that they’re different product lines, but they’re the same thing (basically) just newer. So its as if the Lexus turned into a Toyota after you’d owned it for 6 months.

14 mariam

I used to build my own computers and buy quality parts with the intention that I would just upgrade parts as needed. That just doesn’t work as 3 years down the line, the new generation CPUs won’t fit the motherboard or the RAM speed is not optimized. So I would end up rebuilding a whole new machine and give my castoffs (still very good machines) to my brothers.

I do spend a lot on my computers but it doubles as my entertainment system.

15 Wooly Woman

I agree with your philosophy Mr Cheap. My current computer went for 5 years and was custom built (with the help of my brother) by me to save costs. My new laptop is fancier, but I ordered from Dell so I could completely customize, choosing the requirements I need to business but not added extras I don’t need. I don’t use it for gaming or music but I need a decent processor, and larger hard drive than off the shelf models have. My splurge was the 17″ screen for mapping- not completely necessary but a nice advantage 🙂

16 Riscario Insider

Interesting post and comments. Over the years, I’ve found that replacing is better than upgrading (e.g., adding bigger hard drive or better video card). So I buy a system and keep it as is during its lifetime. When it’s no longer suitable, I cascade it to another family member. This is usually every two years. I’ve started buying notebook computers (which can’t easily be upgraded anyway).

There are so many choices these days. Using Dell as an example, there is Inspiron for consumers, Vostro for small business, Latitude/XPS for performance. Each has appeal. Within each line, there’s a choice of portability (e.g., 12-13″ screen) and capability (e.g., 17″ screen). Each has appeal. Then there are different prices every week.

The end result is inertia — a form of saving money 🙂

17 Mr. Cheap

Riscario: I’ve found some upgrades are worthwhile and others aren’t. Adding RAM, a bigger HD or a new video card are all affordable ways to extend the life of your system. I wouldn’t even consider upgrading the CPU or the motherboard (at that point its time to buy a new system). Fixing broken parts is also always a debate (I was able to fix me ex’s computer when she had a broken power supply – if she would have had to take it to a shop, I’d probably have recommended she replace it instead).

The other issue that needs to be factored in is if you can upgade the component yourself. If you have to pay someone $50 to put in the new stick of RAM, you’d be $50 closer to buying a new computer if you didn’t.

Passing computers on to family / friends with less needs is a great approach. For years my parents would always get my cast off desktops (and would be delighted with them).

18 joe_dude

LOL… the newer games, whether they are FPS, RTS, etc., all require a lot more horsepower these days than any budget computer can handle.

It’s good advice for a “surfing” computer, but I’m not willing to play games so it looks like Colecovision.

Add the cost of an Xbox 360 or PS3, and the budget computer doesn’t look so cheap anymore.

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