My hard drive on my big desktop machine crashed yesterday. That PC is the one I use for all my blogging and web surfing. It's about three years old and runs Windows XP. At first, I didn't know what the problem was so I went out shopping for a new PC. All I do with it is blog, surf, edit images and videos, store my AV files and a bit of MS Office. I don't need a big gamer's machine. At BestBuy I found a nice ACER desktop for $529. Offhand, I asked what a new hard drive cost, just in case that was the problem. They said about $120.
This is where I really needed a household budget. While I follow most of Dave Ramsey's advice, I don't keep a budget. I just don't spend money on anything I don't need. I've managed to pay off all my debts except my mortgage and have salted some cash away in the bank. I'm in good shape and this expense could be handled easily. I almost bought the machine.
I decided to leave BestBuy and think about it. I tried to make a business case for the purchase. My choices were a new PC running Vista with all kinds of upgrades or a new hard drive and $400. It was then that I realized that my lack of a budget was damaging my decision process. Since I had no money set aside for computers or entertainment, I had no hard decision to make. It wasn't the PC vs. going out to eat, it was just a decision to buy a PC.
Good business decisions are not made like that. Sound decisions are made on marginal analysis. That is, will I get the same return by buying the PC vs. saving the money vs. $400 worth of clothes vs... Without the budget, the money simply came from out of the blue and had no intrinsic value. Had it been budgeted for clothes, my ugrade decision would have been new shoes and some shirts or a new PC.
After I went home, I was able to boot the machine and listen to the noises it made. It was clearly the hard drive and nothing else was wrong. I have decided to just replace the drive, but I'm really wrestling with the underlying problem of not having a budget. I've avoided it because it's a little work and I've been doing OK without one. This experience shows just how close I come, day in and day out, to making bad financial decisions without one.
So now that I'm done with that decision, I have to ask: Will I see you at the Festival of Frugality? I'll be there. You'll know it's me because I'll be the one talking about my new hard drive. And my new budget
Update: By the way, I lost ZERO data because I use Mozy to backup my files over the Internet. That was one of the best decisions I ever made. Mozy rocks!