This segment deals with the financial aspects of collecting --- “What am I willing to spend (or can I afford to spend) in order to achieve my goals?” Although some of you may feel that financial affordability should have been the first article in the series, I always save discussing this until the end for two reasons. First off, my intentions are not to discourage anybody. Secondly, you need to fit your collecting habits to your budget instead of pursuing it the other way around. This helps you realize what you can truly afford to collect.
Budgeting requires a lot of common sense (and with some of us, a lot of self control) when it comes to keeping a roof over your head and food on the table, so don’t make it more stressful than what it has to be. You know what you are earning from your place of employment, and you already know what it takes to keep you afloat with your finances. Is there any breathing room for more spending? How much?
I remember when I realized that I was serious about collecting, how I spent hours figuring out my budget. Now remember that I started this seriously in 1970, and the cost of living was a fraction of what it is now. I bought my first new car for less than $3,000 and a pack of smokes was around 30 cents if that. Never mind the moment of nostalgia. I figured that I could spend about $40 a month if I really stretched things, and still afford my share of the rent, utilities, and food. So as a safeguard, I decided to cut the budget in half and spend $20 a month. To this day, I still do the same thing. And that is my advice to you. Whatever figure you come up with, cut it in half and be safe.
The rules can always change slightly depending on long term or short term investing, or if you’re going to do card shows or even try to own your own shop. Just remember to take all the overhead scenarios into consideration if you’re deciding on doing shows or owning a shop. Obviously, when it comes to the latter, you’ll have to build yourself a good business plan and stick with it. But I can tell you for certain that the retail aspects of collecting were far simpler with less expense when I started. I collected for about 10 years before I jumped to the other side of the counter or the table.
Another habit I developed whenever I had an increase in earnings was that I would devote about 20 to 25% of the net results into the collection. After a year of doing it this way, I actually opened a separate account just for this and received a credit card that was only used for this. The credit card payment came out of the account every month when the bill was due, and I usually only used it for travel and business expenses.
Learn how to prioritize your spending. Do you want to spend this month’s entire budget on one of your favorite players main Rookie cards, or do you want 10 or 12 of his or hers less expensive, newer cards? A good rule of thumb here is that the older the card is, characteristically the more expensive it is. I’ll give you an example based on my own experience.
One of my favorite players that I put on high priority collection status is Derek Jeter, shortstop of the New York Yankees. I started collecting his cards after the Yankees had won the 1996 World Series, and just before they named him Rookie of the Year. I was lucky on that one. I decided that I would purchase his top four rookie cards, got a deal from one vendor for all four, and spent a little over $60 for them. Then the announcement was made that he had won the ROY Award for 1996. The next price guide came out and those four cards were now worth over $90 total. In only 60 days, I had made a $30 profit.
After that, I was all over the board finding his cards the next four years. But it was making me crazy, because I was ordering cards that I already had purchased. Remember the last article where I advised you to keep track of each of your player’s inventories? Obviously, I hadn’t done that yet, and after four years I had nearly 300 of his cards. I learned a two-fold lesson by this one mistake. I used the online facilities at Beckett’s and inventoried all of his cards that I had to that point.
Next, I searched his entire data base of all of his cards that had ever been released, and printed a copy of the entire thing. By 2000, after only 5 seasons in the majors, he had nearly 2200 cards on the market. Not all of them were MLB sanctioned, so I only kept the ones that were sanctioned in my database. Since the list was sorted out in chronological order, I decided that I would work on the oldest cards first. I even dug into a lot of his minor league releases that were MLB sanctioned. Without exception, each month I worked on purchasing the oldest cards first, and this was how I learned that the newer the release, the less expensive the price. By the way, as of this season (2007) and the printing of this article, he now has 7,431 cards on the market. Again, these are not all MLB sanctioned, but it does give you an idea of the popularity factor.
Like I’ve said all along, I’m not a genius; I’m only offering advice based on personal experience, both good and bad. So, here are the key points from this segment to remember. First, fit your collecting habits to your budget, not the other way around. Remember the 50% rule that I use. Second, anytime you’re fortunate enough to have an increase in your earnings, use a smaller percentage of increase towards your collecting budget. Third, prioritize your spending. Keep in mind that the older cards usually cost more than the newer ones.
On a final note, there is one more key point, and it’s probably the most important. Stay focused! Even though you can spend more some months than others, avoid the temptation and stick to your budget. Remember that this is a luxury, not a necessity. Spending money on your hobby falls behind that roof over your head and food on the table. You may think this sounds stupid, but I’ve known people in the past whose marriages fell apart due to foolishness with budgets.
Well, this wraps up the Helpful Tips series, and it is my sincere hope that you’ve gained something out of all the articles. In the future you’ll see other articles from me about collectibles, as well as a variety of articles covering the other major sports.
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