Lending Club Blog

Hedging an Expense

Optional expenses can be delayed or eliminated, but even necessary ones can be hedged through alternatives. Doing so allows you to pay less now in the hopes of avoiding the greater expense until much later.

I ran into this scenario lately when my cordless would no longer take a charge. I use my drill regularly and it allows me to fix a lot of things around the house that would otherwise cost a lot more to have repaired by someone else. To me, this makes having a working drill a necessity, or at least a want worth indulging. Since cutting back on my expenses is more important of late and I hadn’t planned on buying a new drill, I decided to hedge the expense. A simple diagnosis with a multi-meter told me that the drill and battery were fine, but that the charger was defective. Rather than replace the drill, I simply ordered a replacement charger. For a $5 fix, I eliminated the need to spend much more on a full replacement. It may end up that this course of action costs me more in the long run if the charger doesn’t solve the problem as I expect it to, but it is still worth the risk to me because of the relatively low cost compared to replacing the whole drill.

Many of us hedge expenses all the time. A classic case is repairing an older car that is dying a slow death. With each repair, we weigh the cost versus the amount of additional use it should allow. Eventually, putting more money into the car becomes the more expensive route. Buying a replacement car isn’t cheap either, but it will get us more use for our money.

Though this technique may simply seem like delaying the inevitable, it actually can save you money. By looking at the replacement cost and the new product’s expected lifetime, you can determine whether the time bought by hedging the expense makes financial sense.

When has hedging an expense been the right (or wrong) move for you?

Tuesday, March 24th, 2009 at 7:51 am

Comments (0)


Welcome Home

Lending Club named #5 on Forbes’ Most Promising Companies List

Get ready for tax season with Lending Club’s Tax Form Guide

New Adjusted Return Metric

See more
Lending Club Awards
  • Archives z

Recent Posts

A Message to Investors from our President and Acting CEO

Today, our President and acting… Read More »
May 19, 2016

Lending Club Receives Tribeca Disruptive Innovation Award

Disruptive innovation comes in many… Read More »
April 29, 2016

Lending Club Business Financing Review

One of the biggest challenges of owning a small… Read More »
April 27, 2016

Lending Club partners with Funding Circle and Prosper to launch Marketplace Lending Association

Read More »
April 7, 2016

Lending Club Welcomes Maryland and North Dakota Investors!

We’re now open to retail… Read More »
February 23, 2016

What is Lending Club?

More than one million Americans have achieved their financial… Read More »
February 16, 2016

Get ready for tax season! Lending Club Now Offering TurboTax Integration for Form 1099s

Read More »
February 12, 2016

Lending Club Success: Surpassing $16 Billion in Loans

Founded in 2007, Lending Club’s… Read More »
February 11, 2016

Credit Performance Update

Summary: Credit performance of our standard program is coming… Read More »
February 7, 2016

Critical Small Business Financing Issues

A recent Harris Poll survey conducted on behalf of… Read More »
December 17, 2015


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w