Liz Pulliam Weston

The Basics

The hidden costs behind the price tag

With some acquisitions, such as a puppy, a fancy car or a large house, the money you spend upfront is only the beginning of a big drain on your wallet.

By Liz Pulliam Weston

Many times, the price you initially pay for something is just a fraction of what it winds up costing you over time.

Cell phones are a notorious example. Carriers are happy to give you deep discounts on phones because they'll more than recoup the cost over your one- or two-year contract.

Computer printers are another. The units themselves are cheap because manufacturers make their real money selling you replacement ink cartridges.

But there are plenty of other purchases that have steep, hidden costs. Savvy consumers know to anticipate these and factor them into their decisions. Here are four examples -- a silk blouse, a puppy, a sporty car and a big house -- of when looking beyond the initial price tag is essential.

A silk blouse

No other fabric feels quite as good on your skin, but even a reasonably priced, well-constructed silk shirt has hidden costs. To wit: dry cleaning.

Let's assume you buy a white silk blouse with three-quarter sleeves for $68. It's a nice, versatile style you can wear year-round, and indeed you put it on at least every other week. Let's also assume you have to get it cleaned only after every fourth wearing. (Clearly, you never eat soup or spaghetti while wearing it.) Over two years, at $2.50 a pop, your dry-cleaning bill will total $32.50, nearly half the original price of the shirt.

You might reason that the total cost works out to less than $2 a wearing, so the shirt is worth it. On the other hand, you might decide that the hassle, cost and chemicals are enough to seek out a fabric, such as cotton or washable silk, that can be tossed into a washer and cleaned for pennies.

A puppy

The upfront cost for a medium-size dog can run from zero ("Mom, he followed me home . . .") to hundreds or even thousands of dollars for a purebred. For most people, though, the costs really begin after little Beauregard is part of the family.

You should figure on "capital" expenditures of about $270, according to the American Society for the Prevention of Cruelty to Animals, a sum that includes collars, leashes, carriers and the price of neutering or spaying your pet. Annual costs run an average of $620, which covers $310 for a year's supply of premium-brand kibble, $175 for medical care, $15 for a license and $120 or so for miscellaneous costs, toys and treats.

Given that a medium-size dog lives an average of 15 years, that would add up to a total cost of $9,570, or about $1.75 a day for unconditional love and all the poop you can scoop.

Of course, I know folks who have spent more than that just on vet bills. Improvements in animal medicine mean more conditions are treatable, but that also means one serious accident or illness can cost you thousands of dollars.

A tip: If you're a treat-at-any-cost sort of pet owner, strongly consider setting up a special savings account for vet bills or purchasing pet insurance.

A sporty car

Speaking of unconditional love, a lot of otherwise sensible folks lose their minds when it comes to wheels. They'll stretch their budgets to the breaking point, and beyond, to buy the hot car of their dreams.

But depending on the model, the price you pay for a car is typically just 40% to 60% of its true cost of ownership over time.

Let's take the 2007 Ford Shelby GT500, "the most powerful factory-produced Mustang ever built," according to MSN Autos, and a car that Pulitzer Prize-winning car critic Dan Neil of the Los Angeles Times said has "the looks and numbers to make Mustang fanatics shake with anticipation."

Video on MSN Money

Emergency funds  © Comstock/PictureQuest
Everyone needs an emergency fund
It's a stash of cash, but how much do you need? And why should this take priority over other savings goals?

Oh, baby. But the $41,000 or so you spend to acquire this hot rod is just the start. When you count in depreciation, finance costs, insurance, fuel, taxes, registration, maintenance and repairs, the cost of owning this car over five years is an additional$30,000. That's according to Edmunds.com's "True Cost to Own" calculations. Total cost per mile to drive this car: $1.04.

That's more than double what you'd spend to buy and run something that made you look only half as good -- say, the Honda Civic two-door coupe. Not only is the Civic one-third the upfront price -- which means one-third the financing costs, depreciation and taxes -- but you'd spend only half as much fueling it. Insurance, repairs and maintenance are all about 33% less than with the Ford. All told, you'd spend about 50 cents a mile to drive this car.

A tip: To get a rough idea of a car's real monthly hit on your budget over five years, double the price tag and divide that by 60. Or use Edmunds.com's "True Cost to Own" feature for more-precise numbers.

Continued: A bigger house

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