How To Afford A Collection

I watched early this morning and you make great points.  Many that I follow myself.  I think you definitely did your channel a real service for explaining your process and how you handle the hobby from a financial view.  Definitely some good points.

Unfortunately there is a lot of pressure to have the latest and greatest.  In my opinion YouTube and some "Influencers" are part of that problem though through no fault of their own.  We see everyday on YouTube people getting a load of engines or putting out weekly videos of new "stuff".  I have no idea where the heck they put the stuff!  LOL!  While they are not to blame by any means for someone else's ability to control spending it does definitely create a "gotta have" mind set.  Peer pressure has always been around and always will be. 

I, like you, have always been conscious of what needs to be taken care of first before the hobby.  It's a good habit to have.  Times I went to York just to hang out and knowing I wasn't buying anything because the money wasn't discretionary.

Again a really good video. I always enjoy your videos Chris.

When more and more items are cataloged or announced than every before it's always good to follow Dirty Harry's advice,  “A man's got to know his limitations.”

Thanks for a candid discussion.

While I disagree about using credit cards, most of the info is sound - I especially liked the point about dopamine.  Regarding credit cards, getting a 2% rebate on money that you're going to spend anyway is a freebie that adds up - if you pay off the balance each month.  In 40+ years of credit card usage, I've paid ZERO in interest or charges, and most of my friends do the same.

What I'd really like to see is a video from the folks who buy the big dollar auction items about how they afford to do so.  An empty set box for a pair of postwar F3s sold at Stout's a couple of weeks ago for $3800 (not including buyers premium), and the inner boxes went for about $900.  For boxes of AIR!

How To Afford A Collection ?

Buy used.  

Trains should be a hobby to enjoy not a financial burden.  As I said many times on my videos, I cycle through my collection.   So, no matter how many videos you see on my channel, you won't find all those trains in my house.  Many have been sold off as I got new stuff.  The old stuff offsets the cost of a new engine.  My rule is if it does not fit on the wall shelves in my train room, and I buy something new, something else has to go.  No trains are allowed to be stored under the layout (what's the point).

I agree the YouTube videos of buying every new engine seems crazy.  I think it's more for clicks/likes than enjoying the actual piece. 

I actually had people make comments on some of my videos to go buy something specific to review it, lol.  Like I was buying trains just to do a review for them!

Also, having a lean, mean collection requires less maintenance, lol.

What I'd really like to see is a video from the folks who buy the big dollar auction items about how they afford to do so.  An empty set box for a pair of postwar F3s sold at Stout's a couple of weeks ago for $3800 (not including buyers premium), and the inner boxes went for about $900.  For boxes of AIR!

Can you imagine how much more expensive they would have been if there were actually trains in them?

@Sean's Train Depot posted:

Trains should be a hobby to enjoy not a financial burden.  As I said many times on my videos, I cycle through my collection.   So, no matter how many videos you see on my channel, you won't find all those trains in my house.  Many have been sold off as I got new stuff.  The old stuff offsets the cost of a new engine.  My rule is if it does not fit on the wall shelves in my train room, and I buy something new, something else has to go.  No trains are allowed to be stored under the layout (what's the point).

I agree the YouTube videos of buying every new engine seems crazy.  I think it's more for clicks/likes than enjoying the actual piece.

I actually had people make comments on some of my videos to go buy something specific to review it, lol.  Like I was buying trains just to do a review for them!

Also, having a lean, mean collection requires less maintenance, lol.

Sean - Exactly! I really appreciate your point about maintenance, that's a huge benefit of rotating items regularly. I idea of buying something for a review is well out of my price range! I'm fortunate to have a lot of good local friends in the hobby with various collections that loan models out for the channel to feature.

The ability to afford something, especially items that are completely discretionary like model trains, is completely relative.  There's always someone who has orders of magnitude more money than you personally, and while you may not realize it, you're incredibly more well off financially than many others, some of whom are probably on this very forum!  One of the downfalls of modern society is the obsession with what other people have.  Pro tip: do what you enjoy, within your means and for the right reasons.  Enjoy what others are doing when it speaks to you, but out of genuine interest, to learn, or to help achieve a lasting goal -- never for the sake of "one-upping" or some external focus that's ultimately not important.  Just MHO.

@BlueFeather posted:

The ability to afford something, especially items that are completely discretionary like model trains, is completely relative.  There's always someone who has orders of magnitude more money than you personally, and while you may not realize it, you're incredibly more well off financially than many others, some of whom are probably on this very forum!  One of the downfalls of modern society is the obsession with what other people have.  Pro tip: do what you enjoy, within your means and for the right reasons.  Enjoy what others are doing when it speaks to you, but out of genuine interest, to learn, or to help achieve a lasting goal -- never for the sake of "one-upping" or some external focus that's ultimately not important.  Just MHO.

Very true!

@BenLMaggi posted:

Can you imagine how much more expensive they would have been if there were actually trains in them?

From what I've seen, the actual engines would have added less than 20% to the total price.  The boxes were "worth" more than 5 times what was inside them.  Crazy.

@MartyE posted:

I have no idea where the heck they put the stuff!  LOL!

If you watch Eric's videos, he has one that he shows the storage unit where he has a ton of trains.  You know you have a lot of stuff when you have to start storing them off-site!

Great video, Chris…………you did a great service to your younger followers talking about fiscal responsibility. Bravo!

Peter

@gunrunnerjohn posted:

If you watch Eric's videos, he has one that he shows the storage unit where he has a ton of trains.  You know you have a lot of stuff when you have to start storing them off-site!

If I did that, the storage unit would include a bed, microwave, fridge, and port-o-potty.

I watched this video and it's full of common sense.  The most important thing is that life comes first, then trains.

To me, it's important to "be forever on the lookout" for opportunities at the right price.  That's how I was able to get my reproduction Canadian Pacific 2373 A-B-A F3s for $ 400.00.  I put it together a little bit at a time.

Using a debit card doesn't build your credit history.  Having a background level of credit card activity builds credit history.  Treating credit cards as charge cards - paying them off every month - will give you a very good credit history with a credit score above 800.

I'm not into "keeping up with the Joneses".  The Joneses have different interests and the ones I know have fantastic collections that are different from mine.

Someone earlier asked about how one handles big dollar purchases.

I'm in a position where I can handle anything reasonable out of current income.

I pre ordered the Lionel Legacy Frisco 1630 Russian Decapod (2331310) for $ 1,300.00 with tax.  Put $ 100.00 down and paid off the rest on delivery.  Paid off the credit card balance on the next bill.

Another way to afford a collection is to classify potential purchases by need and desire.  A potential classification:

1. Must buy.
2. Want to buy.
3. Will consider if the price is right.
4. Not interested.

In my case, the classification would be

1. Santa Claus figure in scale with my Grinch figure.
2. Add on extruded aluminum Canadian Pacific and Lionel Lines passenger cars that I don't have.
3. Scale sized Pennsylvania S2 turbine.
4. Triplex.

Your mileage may differ.

I buy junk although now even the junk goes for big money.

Pay Pal Pay in 4 has helped me rebuild my collection. It has made this hobby more affordable, and there is no interest when it comes to Pay in 4. You have to know your budget and limitations. People have to be very responsible about how they spend and buy these trains. I think most people have FOMO now due to BTO, which has officially been a thing for 10 years now. I buy only what I want and being in a one-bedroom apartment in NYC, I rather have a decent-sized collection that won't overtake my apartment. I'm only limited to diesel locomotives, Subway sets, and small steam engines so that makes it a lot easier.

Fabulous video Chris!!  You make solid common sense based points.  I think this video serves our community well!  Thanks for taking the time to thoroughly address this issue.  Best wishes for a wonderful Thanksgiving to you and your family!  

At times it can be intoxicating being at a train show where there are lots of "great deals" on engines and rolling stock that one may not own.  I can understand how easy it is to impulse buy when credit cards are in your wallet and there is so much eye candy at the show or at a train store.      Personally I have made only a few impulse purchases since getting back into hobby some 20 years ago ... whipping out that credit card ... getting the dopamine rush ... and next month when the credit card statement comes in the mail .... "why the &#@* did I do that?!!!"   But I paid it off immediately!

As for keeping up with the Jones family ... Personally as a musician I realized a long time ago that there will always be someone who can play better than me and I will always play better than someone else.  It's all about enjoying the process of playing and sharing the music.  Keeping up with the Jones' is a rabbit hole not to enter.  Doing so extinguishes the fun in either playing music or playing with trains.  

As for credit cards:  I always pay with cash with the exception of buying new locomotives.  Then I will use a credit card which automatically extends the manufactures warranty by a year or two ( depending on the card's terms ).  I always pay the locomotive purchase off as soon as the credit card bill comes due.  

I save my spare change all year.  For instance this past fall for York I was able to take $326 from my change jug.  Of course I first took the change to a local grocery store where there is a change counting machine.  Once the change was counted I then got paper cash.  Yes I had to pay a percentage for the change to be counted but doing so saved me a lot of time as opposed to having to count and roll it myself.   Actually I only spent $200 at York in the fall,  so I now have $126 unused York money still in my train budget.

I would say that 80 percent of my collection I've bought used. Over the years, I've gotten some fabulous deals at local community train shows.  Like many of us I'm no stranger to E bay and have gotten lots of super deals there over the years.   Of course using auction sites requires patience and good working knowledge of the value of the listed train items.    Another 5 - 7 percent of my collection folks have given me as gifts .. for which I'm very grateful!     The balance of my collection was purchased  new.  The new items were purchased at deep discount or slight discount.  I've never paid list price for a new engine or piece of rolling stock.  When I first got back into the hobby, I purchased new locomotives from local train stores using their layaway plans ... 10 or 20% down and pay off the rest a little bit at a time until the engine was paid off.  Sometimes it would take me a year to pay off an engine.    Sadly those stores are no longer around.  

Currently I have one pre-order from Mr. Muffin ... the Atlas O scale Consolidation in Western Maryland scheme ... which according to Atlas O will arrive this coming spring. I have this one on my AMEX card who will extend the manufacture's warranty for one year.   I've been stashing cash away for this purchase including the $126 unspent money from this past York.  

@trumpettrain posted:

...

As for credit cards:  I always pay with cash with the exception of buying new locomotives.  Then I will use a credit card which automatically extends the manufactures warranty by a year or two ( depending on the card's terms ).   ...

Have you ever made a claim on that?  I'm wondering how it would work, especially on MTH items where the warranty period is based on release date, and after a year they probably don't have a replacement available anyway.

(I didn't know that any cards still offer that feature.)

Pay all the bills on time (mostly ) and in full each month......including the train bills.

I use PP which is tied to my bank debit card for most online purchases so if the cash isn't in the bank I don't buy. Most of my collection has been bought on the 2nd hand market from the usual sources. I shout out to Scott and Trainz who has been the recipient of much of my train expenditures......

The pre-orders are tricky and one needs to be prepared for several of them possibly arriving at the same time. Just had that happen with a bunch of RMT cars I had on order from several vendors. Not that we're talking about 4 Visionline steamers here but.....

I'd like to build a bigger layout one day and after pricing what I'd need from Ross and Gargraves I got sticker shock......and that didn't include benchwork, wiring, power and control, etc.......

All and all it could be worse....I could have bought a boat......

Bob

@Mallard4468 posted:

Have you ever made a claim on that?  I'm wondering how it would work, especially on MTH items where the warranty period is based on release date, and after a year they probably don't have a replacement available anyway.

(I didn't know that any cards still offer that feature.)

American Express has come to our rescue a few times. Not that they are going to fix a broken engine but I've gotten partial refunds on items purchased with the card that the mfr won't cover under their warranty/ expired warranty.

@Mallard4468 posted:

Have you ever made a claim on that?  I'm wondering how it would work, especially on MTH items where the warranty period is based on release date, and after a year they probably don't have a replacement available anyway.

(I didn't know that any cards still offer that feature.)

Mallard4468 -  I haven't had to make a claim as of yet.  In all the MTH engines I've purchased new from retailers in the last 20 years ( I've sold some of those over the years. ) I've never had one go bad after their warranty expired ( Only one DOA out of the box and retailer immediately exchanged it. ) during the one or two year window ( depending on the card used to purchase. ) of the card's extended warranty protection.  Same for Lionel's and Williams purchased in the mid 2000s.   My most recent Lionel brand new purchase from Charles Row, a Lion Chief Plus doodlebug,  the manufacture's warranty is about to expire at the end of December.   I'm hoping after having to send it back to Lionel twice for warranty repair ( It wouldn't run properly right out of the box ) that they finally  got it right.   We shall see ... so far so good.    I may have to use the AMEX extended warranty but hopefully not.

I agree with Mike Caruso and buy used or on the secondary market. I am not in the market for all this new stuff. It might be cool and nice to have and run but waiting a year, 2 years or down the run, you can buy that high dollar engine for a lot less. You know by then it has been battle- tested and runs well.
Almost all of my collection is bought at shows or from club members at very discounted down prices and I get to enjoy every piece then.
My latest purchase is the Lionel 100th anniversary gold Hudson from 2000 at very good price from a good friend. Always wanted this piece of Lionel history and have it now!
Buy on the secondary market and save big time!
For the rest who have to have the latest and greatest, that is your preference!

My rules are similar to Chris’s.

1. Pay cash or have enough money on hand to pay off the card the next month. Otherwise I don’t buy it. I use a separate card  only for my train purchases.
2. Buy used. The engine or cars that you desire will come up to buy soon after the  next catalog release. Be patient!
3. When I add a new engine to the roster that means that there is one gathering dust. Time to sell.
4. Inventory your rolling stock, at least twice a year, and sell the cars that haven’t been run. Again time to sell.
5. Have fun!!!
Happy Thanksgiving!!!

A vast majority of my stuff has been purchased used, there's so much available it's pretty easy for the most part to find the items you want.

Please, please, please don't use debit cards to buy things, especially on the internet. If you can manage to budget your cash and use a debit card that puts your entire account balance at risk of fraud, you can manage to pay off a credit card at the end of the month.

@J.Dooley posted:

Please, please, please don't use debit cards to buy things, especially on the internet. If you can manage to budget your cash and use a debit card that puts your entire account balance at risk of fraud, you can manage to pay off a credit card at the end of the month.

That's why you have PayPal. Most DC's have fraud protection but be sure and ask your bank.

@J.Dooley posted:

Please, please, please don't use debit cards to buy things, especially on the internet. If you can manage to budget your cash and use a debit card that puts your entire account balance at risk of fraud, you can manage to pay off a credit card at the end of the month.

Amen!  It's unwise to use a debit card for anything except an ATM withdrawal.  Minimal protection from your bank.

@feet posted:

That's why you have PayPal. Most DC's have fraud protection but be sure and ask your bank.

If you use PayPal, attach a credit card - nothing else.  Never attach your debit card or a bank account.  PayPal can be hacked, and finding a live human to help is difficult.  Fraudsters can drain your bank account.

@Mallard4468 posted:

Amen!  It's unwise to use a debit card for anything except an ATM withdrawal.  Minimal protection from your bank.

Debit cards come with both of my bank accounts.  They're both in my safe, never to be used.  I use the credit card for pretty much everything, and no, I've never paid interest on any credit card.  If you can't afford to pay it your credit card bill off when the bill comes, don't use the card!

I use my debit card for almost everything. I have never had a problem.

Question:  Wouldn't "professional" You-tubers, such as, I imagine, the OP, treat their income from those videos as a Business [ or "Non-business Business"] in the IRS sense ?  And if so, wouldn't their train related purchases [ and other expenses such as travel ] be treated as an expense ?  Depending on how they are amortized, they could even take selling train items for less as a Loss,  and deduct that from income.  If that's the case, one can certainly afford a lot more trains for the buck.

SZ  [ not a CPA ]

Agree with previous posters.  Never use a debit card for purchases.  Debit cards don't affect your credit history so you don't exist as far as the credit bureaus are concerned.

@Mallard4468 posted:

Amen!  It's unwise to use a debit card for anything except an ATM withdrawal.  Minimal protection from your bank.

If you use PayPal, attach a credit card - nothing else.  Never attach your debit card or a bank account.  PayPal can be hacked, and finding a live human to help is difficult.  Fraudsters can drain your bank account.

If your debit card is visa backed (if it has visa on it) your account has fraud protection, just like a credit card.

@Cmontagna posted:

If your debit card is visa backed (if it has visa on it) your account has fraud protection, just like a credit card.

If your debit card is VISA backed (if it has VISA logo on it) your account may have some fraud protection, almost like a credit card.

Credit protection is provided by legislated regulation, debit accounts are not despite terms / agreements offered by the issuer.

@gunrunnerjohn posted:

Debit cards come with both of my bank accounts.  They're both in my safe, never to be used.  I use the credit card for pretty much everything, and no, I've never paid interest on any credit card.  If you can't afford to pay it your credit card bill off when the bill comes, don't use the card!

Same here. I actually get paid to use the credit cards.

@ADCX Rob posted:

Same here. I actually get paid to use the credit cards.

Yep, I use the one that has the best discount for what I'm buying.

A humorous comment, how to avoid a collection turning into a junk yard.  When my wife and I were first married, (47 years ago) we bought a small fixer upper travel trailer to put on our land and live in while we built our house.  I needed to rebuild the shower, and decided to use a large stainless steel restaurant steamer tray pan for the bottom of the shower.  A trip to the junk yard that comprised 10 acres of stuff, and way way back in the hinterlands of the 10 acres in a distant corner, underneath a 5 stacked pile of of rusting US government surplus metal desks, buried in weeds and spider webs, the perfect specimen was found, probably sitting there for years.  I dug it out and carried to the front of the yard where the owner and his wife lived in a double-wide on the property.  This was not an auto junk yard, but an old fashioned spot with everything you can imagine.  When I got to the front, his wife came out and I asked her how much for the metal pan.  This is where I learned how junkyards like this start.  Her reply, "He's not here right now, you need to come back later, because he might have a use for that."  So, balance your 'collection' against what could possible be the seeds of a junkyard.  While I don't have 10 acres to put my stuff in, I do fall victim to my own self warning with collections of things, "I might have a use for."

@Cmontagna posted:

If your debit card is visa backed (if it has visa on it) your account has fraud protection, just like a credit card.

The problem isn't the lack of fraud protection, it's the fact that whatever gets taken from your debit card is YOUR money that you'll be without while the corporate machine spins its wheels. The limit on a credit card belongs to the bank. If you steal my card and run up $50k in fraud, it doesn't impact me in the slightest. If that came out of my checking account, it would be a very different issue.

Please, never use a debit card, ESPECIALLY on the internet. If you can't use and then immediately pay off a credit card, there's a larger problem you should be focused on, never mind the money you'll save by doing so.

I agree with so much of your video, and I recognize it's hard to give financial advice and not come across as condescending and commend you for the effort, but debit card fraud can ruin your financial world in a way that a credit card with the exact same discipline never will.

@Steinzeit posted:

Question:  Wouldn't "professional" You-tubers, such as, I imagine, the OP, treat their income from those videos as a Business [ or "Non-business Business"] in the IRS sense ?  And if so, wouldn't their train related purchases [ and other expenses such as travel ] be treated as an expense ?  Depending on how they are amortized, they could even take selling train items for less as a Loss,  and deduct that from income.  If that's the case, one can certainly afford a lot more trains for the buck.

SZ  [ not a CPA ]

I don't know if they DO (we've never, to my knowledge, had a YouTuber provide those kinds of details), but they definitely should.

With the new layout being built in the next week or so, I've definitely looked into what it would take on the business side to take my hobby and treat it as a business.

Security is a moving target. Make sure to pick financial institutions with a good history for dealing with fraud.

As far as buying used, I've done it a lot but get tired of weird problems I would never think to ask about. I now finish any condition questions with "Is there anything unusual I should know about with this item?".

I try to buy where the item has obviously not been used much. Or I buy basket cases for cheap that I know will be a fun project.