We were at the Prada store at Bloomingdales, New York City.
It’s the kind of shop where nothing has a price tag on it because if you need to ask, you can’t afford it.
But my sister was in need of a handbag. And she has expensive tastes.
So I tried not look too awkward while she discussed the bag with the lovely sales assistant. And then came the punchline.
Let’s just say, the bag cost the same as our return flight from Australia and our week’s accommodation in New York, combined.
I lost my faux-cool and actually gasped in shock.
But my sister didn’t miss a beat. She graciously said she would think about it and we left the store.
Once we were out of earshot of Prada, I exclaimed,
“Wow! Would you seriously drop that much cash on a handbag?”
My sister coolly replied,
“If I really loved it I would. Besides, it’s an investment.“
I looked at her as if she were crazy and then tactfully changed the topic to lunch.
Admittedly, it’s something I hear a lot since adopting a capsule closet.
The problem is, I mostly hear it from people who use the term to justify spending a fortune on clothes.
Economically speaking, an investment is when you spend, expecting to gain a profit on that item in the future.
Except, we wear our closets. Our clothes are used up and worn out. We don’t cash in on them later. Which is just as well. Because clothes and accessories are like cars. They lose their value the minute we take them off the lot.
Don’t believe me?
Investigate any section of the local classifieds and check out how many designer “investment” pieces are slashed more than half their value when cash-strapped or bored-with-it-already remorse buyers discover their “investment” isn’t as liquid as they would like…
So no, I don’t use the word investment when buying pieces for my closet…
I get that well-made, classic styled pieces last, especially when they are well taken care of. But they don’t have to be designer and they certainly don’t have to cost a fortune.
Yes, I’m selective. Yes, I look for value.
Yet I know value doesn’t always correlate to expense, especially not in the fashion world.
A Tale of Two Trench Coats.
I mentally calculate my cost per wear when I buy pieces for my closet.
I know that the cotton, lined trench coat I purchased from Big W will last me many years. Sure, it’s not Burberry, but that doesn’t bother me at all.
Because my Big W trench coat cost $35.00. If I wear it for 60 days a year for 10 years, my chain store trench has cost me just under 6c a wear.
The Burberry trench coat cost $3000. If I wear it for 60 days a year for 10 years, The Burberry trench coat has cost me $5 a wear.
Want to see some real investment numbers?
If I buy the Big W trench instead of the Burberry and actually invest the difference of $2965 into a fixed term account at 2.9% interest paid annually for 10 years, I earn $3945 or just under $1000.
Alternatively, if I put the $2965 into a lump sum repayment on my mortgage in the first year (average mortgage is $357,200 over 30 years) I shave 7 months off the term of my mortgage and save $13,573.91 in interest repayments over the life of the loan.
Finally, let’s assume I did buy the Burberry trench and being a little strapped for cash, put it on my credit card.
$3000 at 18% will take me 25 years to pay off if I just make the minimum monthly repayment.
That Burberry trench would actually end up costing me $9521.
When it all laid out like that, it’s easy to see that perhaps you have much better things to do with your hard earned money than spending a premium on designer brands.
Most importantly, you know the difference between an investment and a closet!
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