Was Buying That Chanel Bag a Mistake?

Splurging on Luxury

@studio_ampersand

We recently came across a thought-provoking article by a certified financial planner on CNBC. The author, now 38, revisits the decision by her 28-year-old self to “invest” in a Chanel bag rather than stock in Amazon. She surmises that she now would be $40,000 richer had she purchased stock rather than a purse.

According to CNBC calculations, a $2,850 investment in Amazon stock in 2010 would be worth $39,846.50 as of March 9, 2020, for a total return of around 1,298%.)

By her account, that first purchase also triggered a series of many more handbag purchases which she later grew to regret. Eventually, she sold many of her barely-used handbags on eBay, some even at a profit, but nowhere close to the amount she reckons she could have made by investing wisely in stocks.

So, this got us thinking... Is it always (or ever or never) a mistake to indulge in a luxury handbag?

@queen_isabelle8

As much as we at PurseBop love our purses – the ones we own and the ones we covet – we also always encourage responsible luxury spending. It is never worth going into debt for a handbag, no matter how special (read: Q/A: Ask PurseBop About Your Hermès Collections). Make sure you save or budget first. And please note, we are purse pros, not investment experts – this is not intended to be financial advice.

Luxury consumers – whether seasoned, new or aspirational – should weigh several factors before making those big luxury buys.

First, can I afford it now? If you have some cash on hand, perhaps start a little savings pile, and you don’t have debt, when the pile gets big enough, maybe splurge. On the other hand, if you have upcoming important expenses – like education, purchasing a home, paying for a wedding, creating a college or retirement fund – then the bag should wait. To repeat: it makes no financial sense to be in debt and still put thousands of dollars towards purchases that can be postponed.

Head to Toe Hermès

@consignmentbar

Which begs the next question: must I have it now? Rarely is the answer yes when it comes to a purse. Even if culturally we refer to some as “must haves,” they’re not. With purchases like this, there is no pragmatic reason for immediacy. Sure, it’s hard to turn down an offer for that Hermès Birkin when you don’t know if or when you’ll have another chance, but always remember that bag is hardly a necessity. Put your life’s priorities first.

However, the calculation may alter with your financial position. If your current and future financial goals are being met, then spending a pre-planned budgeted amount on a luxury handbag could be a guilty pleasure you happily indulge in. Prudence will serve you well here. Even if you don’t plan to sell your bag, it often pays to stick to top brands, classics and good quality products less likely to deteriorate or go out of fashion.

As for a luxury bag being a gateway to more… well that can happen. The first bag that crosses, for example, the four or five digit pricemark, may lessen your future sticker shock. In that case, the solution is within you – control yourself. And weigh the factors discussed above.

Kelly on Kelly

@ms_bubbleluv

Annual price increases are common among luxury brands, so try to buy before the next big hike. This advice has never been more important – so many readers planned to buy a coveted Chanel Classic Flap Bag or the Louis Vuitton Multi Pochette before the pandemic lockdown. With stores shuttered and virtually all retail closed, purchases were impossible. Then, as commerce slowly reopened, these hopeful buyers watched with horror as brands like Chanel and Louis Vuitton increased prices significantly.

Read these price articles:
Chanel Price Increase Confirmed for USA: Here are the New Prices 2020

Chanel Admits to Price Increase
Shocker: Louis Vuitton Prices Go Up Again – Second Time in 2020).

As so many remarked, the monetary goal-post for luxury bags was just pushed further away. And once they’re up, unfortunately they never seem to come back down.

So, be grateful for what you have. Look at your prized collection, admire it, use it to the fullest, and be glad you bought when you did. For those that you no longer love, consider rehoming:

Dear PurseBop: When and How Should I Rehome a Bag?
Hermès Resellers Flourish in Lockdown

Enjoying your luxury accessories

@ec24m

You shouldn’t despair either, an increase in prices also could mean better retained value for our handbags in the secondary market. And if you just bought at these high prices, don’t worry, they’re likely not going lower. But, don’t automatically expect to make a profit reselling your bags. Some retain value better than others, but even pre-owned Hermès bags don’t command the premium they once did. There still are those special handbags that actually appreciate over time, but, if the author of the CNBC piece can teach us anything, this shouldn’t be your primary reason for making an extravagant purchase.

Read related: 
Part 1: Has The Value of Birkins and Kellys Declined?
Part II: How to Determine the Resale Value of your Hermès Bag

In short, indulge wisely with eyes wide open. If you want it, and you have the lifestyle to justify it and the funds available to buy it, there’s no time like the present. There’s usually an impending price increase just around the corner, making it a little bit tougher to purchase that dream bag.

Love PurseBop
XO

Curated By Monika