Affordability: What it really means
It’s not about what you can buy
“Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat…”
That’s the philosophy Robert De Niro’s bank-robber character lives by in the 1995 movie Heat. It’s not just great advice for a bank robber — but possibly one of the greatest bits of financial advice one can get.
I’ve never been a minimalist. I’m a collector — not a hoarder. I collect comic books, watches, vintage lighters, single malt whiskies, jackets, shoes, hand-woven shawls and outdoor gear. I’ve run up credit card bills, taken car loans and personal loans. Basically, I’m no different from most people I know. I manage my personal finance badly.
Also like most people I know, I look at the stuff I have and wonder how I ended up with so much of it and use so little. And before you ask — no, I don’t regret buying any of it. What’s more, I continue to collect.
But all that acquisition has changed my view of ‘how’ I buy now. Let me explain…
When I landed my first job, I used to look at stuff I wanted (not necessarily needed) and try to save up for it. The money I saved in my very first month went towards a handmade wooden bar unit that I ordered on eBay. While I wouldn’t term it as ‘expensive’ today, it was about a quarter of a month’s salary back then (about 18 years ago). I’d convinced myself that I could afford it because I could pay the full price upfront from money I had in my account.
And so, ‘paying the full price upfront from money in my account’ became my definition of affordability for the first couple of years. Then, I qualified for a credit card.
Paying with a card evolved the definition. I no longer needed to have the full price in my account, it simply needed to be ‘within my credit limit’. And that was my new definition of affordability.
Next came the car loan.
Like most car buyers, I considered two things in terms of affordability — the down payment and the EMI amount for the tenure. I settled on a well-known hatchback that would get a respectable “nice” followed by a head bob from friends and colleagues.
For the next 10 years, that definition stayed with me for every large purchase — down-payments and EMIs. But driving that car is what made me reconsider my definition of affordability.
There was nothing wrong with the car. There were no major maintenance issues. And it was a pleasure to drive. In fact, I still think it’s one of the best cars in the country today. But given India’s urban traffic conditions, driving means constantly worrying about who or what you’re going to run into — not so much because you’re worried about them, but because of what it might do to your car.
You have the bikers who try to inch past you in traffic jams — with their handlebars sometimes swiping your doors; Tuktuks who jam themselves against your car in failed attempts to get ahead at traffic lights; the cars that bump into you because you had to brake hard to avoid the guy cutting in front of you. And then, of course, there’s the usual vigilance that’s associated with driving in general — like avoiding pillars in parking lots and such.
And then, a few years ago, I traded it in for a new car. I got a chance to re-do the purchase journey. This time, I added one additional parameter to “down-payment and EMI”. I chose “ability to walk away from it in 30 seconds without regret.”
That changed things completely. I was now looking to buy a car that I wouldn’t care about — or wouldn’t have to care about. It would be cheap to buy, cheap to maintain. And since I wanted to “walk away…”, it would be something that I wouldn’t have to be careful with.
In the end, I settled for a SUV that’s more popular in the rural markets and has a bullet-proof build to take on the worst of Indian roads. I no longer care about the scratches or little bumps. And if someone bumps into me, I know — without even checking — that the damage is more to their vehicle. It’s taken the stress out of the daily drive and, as a result, I drive more. I take it across the country without a second thought and — if the day comes that I do have to walk away from it — I’ll do so with fond memories and no regrets.
And, for me, that is what true affordability is — the ability to lose something without a regret.
