THE OTHER day I was browsing my favorite Magic: the Gathering (MTG) websites for a specific card I wanted. [Yes, the Solvency Shark is a gigantic nerd, but before you mock me, consider this sobering fact: I have anywhere from five to fifteen rows of teeth in my jaws, depending on the species.]
I really wanted to buy this card in time for an upcoming reunion with a bunch of my MTG playgroup buddies. At the time, I thought to myself, “If only I can get my grubby little hands on this card, I’ll be an unstoppable juggernaut of crushing might! My fellow card players will have no choice but to break their backs upon the undeniable force of my wizard fury!”
I found the card selling for $0.10. Not a bad price to pay for a potentially powerful card. I’ll take it! But then:
“Oh no, they don’t have the card in stock! Who knows when they’ll get it back!” I said. I thought about the problem for a moment, then found myself thinking, “I. must. have. this. card. now!!”
I searched the internet again. I managed to find the card – yesss! – in a special edition shiny format that was ten times as expensive. Dangit! At an even $1, this card was clearly overpriced and threatening to break the bank. [The Solvency Shark has a limited budget for his hobby. $1 is a lot to pay when you only have $8 to purchase cards.]
You know what the Solvency Shark did? He paid that price. He ponied up the buck and he enjoyed doing it. He fell victim to the acquisition premium. Roughly defined, the acquisition premium is the difference in price between an asset’s original value and the price it fetches from the buyer. I like to call it the “I Want it Now!” tax.
People allow themselves to pay the “I Want it Now!” tax all the time. Newly married couples charge thousands of dollars to their credit cards because they see furniture for their new couples’ apartment and want to take them home that very instant. Sure, they’ll have to pay a few hundred dollars worth of interest on that purchase over the coming months, but that’s an “I Want it Now!” tax they’re willing to pay. Alternately, rather than bid patiently on an Ebay item in the hopes of securing a lower price, some people will gladly pay an extra ten to twenty percent on top of the item’s current price to skip all the pesky auctioning and just get their hands on the product.
Some crazy people are even willing to pay ten times the original value of a collectible playing card just to have it in their grasp. [In the Solvency Shark’s defense, the card is the special, shiny version.]
Paying the acquisition premium isn’t necessarily a bad thing, but if you don’t think it through, it can leave you with a feeling of buyer’s remorse. If you’ve just got to have it right NOW and are sure you’ll have no regrets, make the purchase. Otherwise, take a step back and ask yourself, “Do I really feel like paying the ‘I Want it Now!’ tax?”
Live well, live well within your means, and remember – that’s how the Solvency Shark seas it!
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