Categorized | Domaining Tips

Let’s Talk About the *Real* Cost of a Fancy Car

Posted on 27 August 2013 by Andrei

Online entrepreneurs and domainers, compared to offline entrepreneurs and offline investors, are generally younger. Although the age average is lower with online entrepreneurs than domainers, the principle is still valid.

And being young means that for the most part, you are more tempted by shiny depreciating assets than those who are older. Again, I said for the most part, I’m not saying there aren’t exceptions.

A lot of people make this mistake: they have a successful project under their belt, manage to put a little profit aside and spend it all on a fancy car.

What they don’t understand is that the fancy car cost them waaaaaay more than what they paid for it.

Two words: opportunity cost.

You didn’t just “lose” the money you spent, you also lost the opportunity to turn that money into considerably more money by reinvesting in your project or in something else.

And when you are starting out, I’m not really sure you can afford it.

Don’t get me wrong, shiny cars are great.

There’s a time for everything.

If a shiny car represents a reasonably low percentage of your net worth, go for it.

If on the other hand it represents a high percentage of your net worth (as it does for most young domainers/online entrepreneurs), I’d advise against such a purchase.

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