One of the fastest ways people waste money is by buying DVDs.  I have written about restraining yourself from buying expensive widescreen televisions and similar luxury items, but if you were to make an argument for those items, you could say that at least you’d get a lot of use out of them.  A DVD, on the other hand, just isn’t worth its purchase price.  (Renting them–from services like Blockbuster Total Access–is the smarter choice, as long as you watch a lot of DVDs.)

The cost of purchasing DVDs is much more than you think, and restraining yourself from buying so many of them could help you financially much more than you’ve probably thought about. 

The Cost of DVDs 

With DVDs, you are essentially buying something you will only use once, if at that.  I have visited the homes of so many friends and acquaintances who own hundreds of DVDs.  I even have one friend who claims to own over 400 of them.  Yet have these individuals watched each of their DVDs more than once?  Almost certainly not.  In fact, I can guarantee you they probably haven’t even watched every DVD they’ve purchased.

The typical purchase price for a DVD is between $15 and $30, depending on whether it’s on sale.  Let’s average that out to $22.50.  So the average DVD costs $22.50. 

If you own around 100 DVDs, you’ve spent $2,250 on movies that you watched once (maybe) and then stored in a fancy entertainment center, never to be viewed again absent some extraordinary circumstances. 

If you’re a DVD tycoon (i.e., you own 400+ DVDs), you’ve spent approximately $9,000.  That figure is startling.  $9,000??  You’re paying all that money to watch, maybe, 200-250 of those DVDs just once and then store them away (along with the other 150-200 DVDs you didn’t watch) in your very own DVD library?

It’s abundantly clear that the cost of buying DVDs isn’t just the fact that you’re throwing money away into a depreciating asset you don’t use.  You’re also sacrificing an opportunity to take that money you spent on DVDs and invest it something more profitable.  The next time anyone says they don’t have money to start a business or to invest, tell them to take a look at their DVD library. 

The Rule of 5   

So are you not allowed to buy DVDs ever?  I’m not saying that. 

If you feel compelled to buy a DVD, evaluate whether you will get sufficient use out of it to warrant paying an average of $22.50 for it.  This evaluation is what I call the Rule of 5.

You have to make sure that the purchase price can be averaged out over multiple viewings that bring the cost of each viewing to about $4 or $5 per viewing.  In other words, see if you can equate the price of each viewing to the price of renting that DVD from a monthly charge service like Blockbuster Total Access or Netflix.

To do this, you have to figure out how many viewings it takes to achieve that $4-per-viewing value.  Knowing that the average DVD costs $22.50, we can do a simple equation to determine the number of viewings required to make the DVD a useful purchase:

$22.50/number of viewings = $4 per viewing

To determine the number of viewings, simply divide $22.50 by $4:

$22.50/$4 = 5.6 viewings

Thus, to prevent the purchase of a DVD from becoming a wasteful purchase, you would have to determine whether you would watch that DVD 5.6 times or, to be generous, 5 times.   

The Commitment

Can you commit to watching any DVD 5 times?  If you think about it, that is a fairly large number.  There are very few movies, television shows, documentaries, comedy stand-up performances, etc., that you would or could watch 2 or 3 times, let alone a whopping 5 times.

How The “Rule of 5″ Commitment Helps You Make Money 

If you stick to this ”Rule of 5″ Commitment, you will narrow down substantially the number of DVDs you buy.  That, in turn, will help you save a lot of money.  Perhaps thousands of dollars.  Imagine what you could do with $2,000 or $3,000.  And for the DVD tycoons, imagine what you could do with $7,000 or $8,000.  

You can do a lot with the money you save by not buying so many DVDs.  You can invest that money in assets that produce passive income.  In fact, $8,000 is a 10% down payment on an $80,000 one-bedroom apartment that you can rent out for cash flow.  The restraint you show can, without a doubt, help put you on the right track.

Which DVDs Are Worthy Of The “Rule Of 5″ Commitment?

This question is unique to each individual.  However, tomorrow, I will post my own list of DVDs that I believe passes this test.   

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