The idea for the Whopper Test came to me during a recent vacation in the Bahamas, where we celebrated the end of a good trip with an evening in a fine restaurant. I ordered a turtle steak, and it was pretty good sort of like the chicken-fried steaks I'd had in Texas.
But good as it was, I realized I'd rather eat a dead mammal than a dead reptile. For one-tenth the cost, I could have had a Burger King Whopper with cheese, and I'd have been just as happy. At more than $40, it wasn't enough for the turtle to be better than a Whopper, it had to be much, much better.
The turtle steak failed the Whopper Test.
The Whopper Test can be applied to all sorts of expenditures. It's an especially useful tool right now because, well, I think this is a good time to spend money, given the depressing investing climate.
I'm not giving up on new investments entirely. I'll still make regular contributions to my 401(k) and a couple of other investments. After all, buying fund shares at today's low prices could be good business.
But whatever the long-term wisdom of plowing more money into the market, I'd feel awful if stocks keep going down. Meanwhile, the trees in the back yard need some work, the house could use some better windows and a new roof. Why not get these things out of the way now?
There are always legitimate ways to spend money expenditures that pass the Whopper Test. Some pay financial rewards. My new windows probably will pay for themselves if I ever sell the house, assuming I cut costs by putting them in myself.
Other expenditures pay off in less quantifiable ways. They just make life nicer. For these, the Whopper Test involves gauging the margin of joy the extra pleasure or pride you get by spending money on X rather than Y. Is it worth it?
For me, owning a Mercedes or a BMW would not be worth it. Conspicuous consumption is so, I don't know, '80s. In 2001, it looks like bad judgment. And I get a kick out of my Ford pickup, anyway.
Evolving tastes, values
Over time, of course, one's sense of value evolves, so it pays to re-administer the Whopper Test once in awhile. As a cost-saving move, I used to change the oil in my cars myself. Then a day came when I decided it really was worth 10 or 15 bucks to avoid climbing under there and getting that stuff in my face.
My biggest application of the Whopper Test concerns my yacht fund, a mutual fund investment begun a few years ago to someday pay for a sailboat large enough to cruise the world or my retirement or my son's eduction. But it's nice to have an escape fantasy.
In the past few years I've spent a lot of time on a friend's boat, a gorgeous 46-foot, ocean-going aluminum ketch.
But watching yacht ownership from up close is sobering. Buying one (at about the cost of an Ivy League education) is just the beginning; the ongoing costs are enormous. Figure it on a cost-per-day-on-the-water basis, or, even worse, on a cost-per-good-day-on-the-water basis, and the numbers are terrifying.
Then I learned to windsurf on the Venezuelan island of Margarita. A windsurfing board, rig and sail costs a fraction of 1 percent of the price of a third-hand cruising sailboat. And a windsurfer requires no marina berth, engine overhaul or annual hull painting.
A windsurfer will go 30 miles an hour. On an ocean-going sailboat, you think you're screaming at one-fifth that speed.
Sure, having my own yacht someday would be wonderful. But, for me, a windsurfer provides 95 percent of the pleasure I'd get from big boat costing as much as a house.
A windsurfer passes the Whopper Test; a cruising yacht doesn't. And I can afford a windsurfer right now.
I could put that money into the yacht fund, of course. But I'd get no pleasure out of it for years. And the way things are going on Wall Street, I might as easily get a lot of pain.
I could go on, but you get the picture. And anyway, I haven't got time. The shop called; my board is ready.