Five Purchases Pricier Than They Appear

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Friday May 25, 11:20 am ET

ByJeffrey Strain, Special to TheStreet.com

One of the most important factors to consider when making a purchase is the lifetime cost of a product.
Most people focus primarily on the purchase price of the item and forget that there are usually other expenses attached down the road. Understanding the total amount of money you will need to pay over the product's lifetime can mean the difference between having a budget that works and constantly wondering where your money went.

The lifetime cost is the amount you must spend beyond the actual retail price, like batteries for a toy or food for a pet. It affects everything from the biggest purchases you make to smaller, everyday items and can add up to thousands of dollars a year.

Here are five examples of items where the lifetime cost is far more important than the actual purchase price:

House: Many people thinking about buying a home look at the cost of rent and compare it directly to a mortgage payment. While this is one factor to consider, the lifetime cost of a house is much more than the monthly mortgage payment. A house ultimately has many more expenses than renting an apartment.

If these additional expenses aren't taken into consideration, you could purchase much more house than you can truly afford. Some examples of expenses that are often overlooked when purchasing a house are the cost of furnishing a much larger area, yard upkeep, repairs and maintenance, increased insurance payments and increased utility costs.

Car: When most people purchase a car, they are focused on the retail price they must pay. There are, however, many other factors that can tack on costs over the life of the car. Gas, repairs and insurance all need to be considered and these can vary greatly between car models. Edmunds offers a calculator to help you determine the true cost of owning a car to see how much these lifetime costs can affect the actual money spent after the purchase.

Pets: Most pets are purchased when they are still babies, with little thought about costs incurred when they grow up. The retail price for a pet is just the beginning. Food, toys, pet care products and boarding are just some of the costs that also should be considered, but usually are not. If you don't take the lifetime costs into consideration, you may purchase a breed that has common health problems, which can result in thousands of dollars in vet bills.

Printer: While most people focus on the retail price of the printer they are going to buy, what they really should consider is the cost of the ink. The cost of the printer may be a few hundred dollars, but the ink will be many times more during its lifetime. This can mean a more expensive printer that uses less expensive ink will ultimately cost less than a cheap printer that uses expensive ink.

Razor: When you purchase a razor, it isn't the razor itself that costs a lot. What you should focus on is what the blade cartridges will cost, since you will have to buy many over the lifetime of the razor. In fact, many of the razors with the priciest razor blade cartridges will be given away for free in an attempt to lock you into buying their razor blades.

As these examples show, there are often many costs beyond the retail price of a product. When these lifetime costs aren't considered, you'll find that you will be spending much more than you had anticipated. Failing to take all the costs into account can cause great problems when trying to stick to a budget.

If you can remember to consider lifetime costs rather than simply retail price, it will pay off in the long run.

FROM: http://biz.yahoo.com/ts/070525/1 ... f=banking-budgeting