Have You Got The Upgrade Syndrome?

There is a disease out there, so bad it could cost you thousands of dollars without even realising it. At some point in your life you would have had it but you probably never thought about it. While a doctor can't diagnose or cure you of it, you would be well advised to learn about it. The disease is called "Upgrade Syndrome".

Example number one (a friend who should remain anonymous). My friend came home one day to notice the glass on his oven door was cracked. One of his children had been playing in the kitchen and done it. His wife gave him the task of getting a new door. He called the manufacturer and found out they could get one from Europe to fit his model but it would take 21 days delivery.

Then my friend struck on an idea. He thought, well the oven was 15-years-old anyway, why not just get a brand new one. However after doing their research, they came to the realisation that no oven manufacturer made the size oven they needed to fit the space in the kitchen. Their original was an older style oven, which was now not a popular size.

Now he struck a new idea. What about a kitchen renovation; the kitchen after all was fifteen years old. He got contractors out and eventually hired one at $20,000 to do a complete kitchen overhaul. Add this to the cost of a new oven at $1000 and he had spent $21,000.

The husband and wife were now happy with this lovely new kitchen. But their kitchen looked out onto their now somewhat dated living area, which included their somewhat dated television and stereo. You can probably guess what happened next! Did anyone say new TV and Stereo?

But this is not where it ends. Now they started looking at their worn walls and carpets. So the house was painted and new carpets were installed.

This is a couple firmly in the grip of Upgrade Syndrome. They had gone from a broken oven door (which by the way could have been fixed in 21 days had they waited) to nearly a full home makeover which took them 6 months and over $35,000. To make matters worse, this $35,000 was borrowed from their home loan. So now, not only do they owe this money but they will be paying interest on it.

They could have saved thousands of dollars in costs, plus thousands of dollars in interest had they only ordered the new oven door.

Example number two: Do you want to spend more of your hard earned money? There is a good way to do this without even really thinking about it. You could move to a better neighbourhood. Forget about the price of land or a house in this neighbourhood for a second. What else does this suburb bring with it?

In the book The Millionaire Next Door, the authors did extensive studies into the habits of millionaires. One of the more astounding things was many millionaires (about 50 percent) don't drive new cars or live in the higher-class neighbourhoods.

They don't do this, because they are scared to get into "upgrade syndrome". If they lived in the better neighbourhood, they would be expected by their friends, neighbours, and peers to drive the better cars; have the better furniture and whitegoods. Basically, match the spending of what their neighbours or people in those neighbourhoods are expected to spend.

One of the more telling stories in The Millionaire Next Door was the man who said no to a new Rolls Royce. He had owned a business and helped many people with advice on how to start and run their own companies. All the people he helped got together one day and purchased a new Rolls Royce as a present; but he declined it. As he said, when he went fishing he would no longer be able to throw his fish in the back. His house was not in a great area and he didn't want to look out of place driving his new car. He owned a factory with blue-collar workers; he didn't want them to lose respect for him because they thought his new car was above them. Plus he didn't want to get into a trend of thinking he needed bigger and better things. Where would this trend take him?

We are all pressured each day by adverts, society, friends, and neighbours to upgrade our stuff. But the problem with upgrading just one thing means everything else looks out of place. And once you start, sometimes it can be hard to stop. Just look at my friends' new oven door. Have you ever been in this trap? Now you can recognise the signs; try and stop it right away.