The best-laid plans of mice and men...

MrEureka · October 14, 2006 5:05AM

Having learned the hard way by collecting far more series than I could ever hope to complete, I am now very focused and calculating in setting the parameters of my collection. Essentially, I have selected the coins that I want to collect, and within the limits of my projected lifetime coin budget.

Therefore, if I find a coin that I really want but it doesn't fit in the defined collection, I don't buy it. This is hardly my nature, but like I said, I learned the hard way that this is the only way that makes sense for me.

Now, here's the tricky part. If "too many" of the right coins came to market all at once, and assuming that they are irreplaceable, would it make sense to go very deeply into debt to buy the coins? Normally, coin debt isn't a good idea, but in this case buying the coins today means that I won't have to buy them in five or ten or twenty years. In other words, overspending today will allow underspending in the future, so it's OK. Right?

BTW, my bank loves me.

kranky · October 14, 2006 5:22AM

I would think in your case, rather than being motivated to buy today because it will be cheaper than buying later, the motivation would be to buy because who knows when another one will be on the market. And you still are in a position to snag coins outside the scope if you can flip them to help finance the core collection.

And "deeply in debt" is a relative term for sure.

You don't know if the coins will be worth more in the future, but you know how often they are on the market.

MrEureka · October 14, 2006 5:26AM

I would think in your case, rather than being motivated to buy today because it will be cheaper than buying later, the motivation would be to buy because who knows when another one will be on the market.

Of course.

And "deeply in debt" is a relative term for sure.

In my case, don't be so sure.

TavernTreasures · October 14, 2006 5:30AM

I go into moderate debt all the time for my brewery collection. When several expensive pieces come up around the same time, that I know are very rare----well----what am I going to do? Pass and wait another 20 years to find another?

tradedollarnut · October 14, 2006 5:35AM

Therefore, if I find a coin that I really want but it doesn't fit in the defined collection, I don't buy it. This is hardly my nature, but like I said, I learned the hard way that this is the only way that makes sense for me.

The problem with this philosophy is that the value of choice numismatic items tends to rise faster than the income of the average American [appx 7% vs 3% average annual increases]. Purchasing choice items that you really want but aren't in your core collection can act as a hedge against loss of future buying power.

Of course, in a down market it works quite well....

RYK · October 14, 2006 5:35AM

I think that you should make rules for one's collection, inorder that it does not start to rule you, and try your best to abide by them. One of the rules for many of us is not to spend more than one can comfortably afford. Sometimes I stretch this a little bit, but I have never risked any of my financial goals (ie. retirement, education, paying off mortgage early, etc.) to buy a coin, though certainly good opportunities to do so come along with regularity.

Here is what I recommend that you do: Buy as many of these "right coins" (or a couple of the big ones) as you comfortably can and be satisfied that you had the opportunity to do so.

tradedollarnut · October 14, 2006 5:38AM

Take it one step further - suppose you had the opportunity to borrow heavily to buy every coin you would ever need to complete your set. Would that be much fun? No more thrill of the chase - just a huge payment toward debt every month...

tmot99 · October 14, 2006 5:38AM

Once that "planned collection" is complete, then it would likely lead to a bigger plan.

Debt or no debt.

MrEureka · October 14, 2006 5:45AM

Take it one step further - suppose you had the opportunity to borrow heavily to buy every coin you would ever need to complete your set. Would that be much fun? No more thrill of the chase - just a huge payment toward debt every month...

Just offer me the coins and see what happens.

RichieURich · October 14, 2006 5:53AM

Incurring some debt to fund some coins that you might not have many opportunities to buy can be a good thing. Up until a few years ago, I had a "no debt for coins" philosophy. This caused me to pass on a Good 1794 silver dollar from a reputable dealer at $9,900.

Then a friend suggested I decide which of the coins on my wantlist I would borrow to get, and which ones I would not borrow to get. I suggest that every collector faced with the situation Andy has described do the same thing.

CalGold · October 14, 2006 7:04AM

In reality, anyone who has a mortgage or is carrying any other consumer debt is financing their collection by borrowing, since every dollar that went into a coin purchase could have been used instead to pay down debt.

But if you are talking about adding new debt, you answered your own question here:

<< <i>BTW, my bank loves me. >>

And indeed your bank should love you. Consider this. The Rothschild banking fortune began humbly enough in the Frankfurt ghetto when Meyer Rothschild began selling rare coins to German princes and extending them credit. Before long the Rothschild family was one of the wealthiest in the world and so powerful that the monarchs of Europe had to bestow titles upon the Rothschilds to keep in their good graces. Seems that the deal turned out a lot better for the dealer and lender than for the collector in the long run.

CG

IGWT · October 14, 2006 7:22AM

-- " . . . and assuming that they are irreplaceable . . . " --

If it's a choice between acquiring them now or not at all, then, yes, it makes sense to take on debt. Of course, you'll likely be dissatisfied with being "done," and it will take a lot of effort to forsake further acquisitions as necessary to pay off the debt.

Edited to add: If the money spends too easily, rethink your plan..

The best-laid plans of mice and men...

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