(FORTUNE Magazine) – After six years of tinkering with her computer, Jenny still isn't happy. She vents her frustration quietly, shuffling through a pile of bills for a string of electronic face-lifts: a color video card and monitor, a bigger hard drive, more memory, a sound board, speakers, a CD-ROM drive, and even a brain graft--a new motherboard that was supposed to turn the old warhorse into a thoroughbred. It was never enough.

"It's the kids this time," she explains. "I bought all this great educational software, but the computer's just too slow to run it. They get bored to death watching the little hourglass that pops up on the screen. I get bored watching it too. I know I've got thousands tied up in this thing, but I have to do something--do I spend more money to upgrade, or do I bite the bullet and buy a new computer?"

Millions of users are asking the same questions these days as they realize that the machines they bought three, four, or five years ago don't have what it takes anymore. Those old PCs lack the horsepower to run the kids' games or educational programs. Their hard disks are overflowing. And they certainly don't have enough oomph for Windows 95.

Unfortunately, there's no single answer to the upgrade-or-buy-new question. You have to consider what kind of computer you have, how much computer you want to buy, how much hassle you can tolerate, and how much money you're willing to spend.

The easiest solution? Whip out the plastic, buy a new machine, and chuck the old one--or find a deserving home for it. If your computer is a relic of the 1980s, this may be the best choice from the outset.

"We get a lot of people who come in and want to upgrade, but by the time you finish adding up everything they need--motherboard, memory, hard disk, video, and multimedia kit--you're talking $1,300 or $1,400. We tell them they're better off talking about a new computer," says Danny Strickland, service manager for Direct Source Computers, a Baltimore firm that does a brisk upgrade business.

At the low end of the scale, a buyer can find a new multimedia computer with an Intel 80486 processor, a 540-megabyte hard drive, and eight megabytes of memory for as little as $1,400. These machines can run Windows 95 and most of today's games, although they're likely to fall behind the curve in a year or two. At the upper end, machines with powerful, 90-MHz Pentium processors and one-gigabyte hard drives are available for as little as $2,100. The extra money will buy you much better performance now, as well as a few more years before you'll have to worry about upgrading again.

But a new computer isn't in everyone's budget. It certainly wasn't in Jenny's, which explains how she won her unofficial title as Upgrade Queen. "I did everything in bits and pieces as I got the money," she explains. "I guess I could have waited and saved up and bought a whole new computer, but then I wouldn't have gotten the use out of it that I've had."

The modular design of most PCs affords people like Jenny plenty of options. You can't see it from the outside, but under the hood, your computer is actually a collection of components that you can mix and match. It's a lot like a stereo system with a separate tuner, amplifier, cassette deck, and CD player. Upgrading computer components isn't as easy as plugging a new tape deck into your sound system, but you can do the job yourself if you have a couple of screwdrivers and a strong streak of masochism. If you'd rather avoid pain, call a competent technician at your local computer store. Most shops charge $60 to $75 an hour, and common upgrades rarely take more than an hour or two.

Before you take the plunge, take stock of what you have. Four components determine the basic performance of your machine, and they should be well matched. Upgrading one component without the others may not give you the performance you need, just as buying a 300-watt amplifier won't do much for a stereo system with dime-store speakers. On the other hand, if only one or two components are causing a bottleneck, minor surgery may do the trick.

The most important part of your system is the microprocessor--the brains of your machine--and the main circuitboard designed around it. This circuitboard, known in the trade as the motherboard, is your computer. Change it, and you have a new machine, even if everything looks the same from the outside. But don't try this at home, kids. It's a job for a pro. You can have a new 80486 motherboard installed for as little as $350, or jump all the way to a Pentium motherboard for $750 to $1,200.

If you have an older 486 machine, consider replacing your processor with a newer, faster 486 chip. These aren't expensive, but they're a lot better than the old ones and can really juice up your system. Better yet, if you have a 486DX microprocessor, you can now get a Pentium upgrade chip for only $300 from Intel. The upgrade chip could boost your performance by 50%. Talk to a technician to see if your computer can handle this kind of upgrade.

You can also give your computer a cheap, swift kick in the pants by adding RAM--random-access memory chips that hold programs and data while the machine is running. Until a year or so ago, inexpensive computers came with only four megabytes of RAM--barely enough to run Windows 3.1. Add another four megabytes for about $200, and you'll think you have a new computer. If you're moving up to Windows 95, you'll want 16 megabytes of RAM.

Your hard disk may also be hard pressed by today's bloated software. The 120- and 200-megabyte drives that were popular a few years ago are now overwhelmed by office suites that claim 80 megabytes of real estate before you write your first letter to Uncle Lou and by games that dump 30 or 40 megabytes of files on your disk before you zap a single Klingon.

Fortunately, the price of high-capacity drives has been plummeting. A 540-megabyte disk will cost $200 to $250, and a one-gigabyte drive--that's a billion characters' worth of storage--is only $100 more. That's a worthwhile investment. Newer drives also run faster than older units and can speed up your computer considerably.

Like a slow hard drive, an old video board can be a roadblock now that virtually all programs depend on fancy graphics. Older computers often have inexpensive video cards that rely on the microprocessor to move all those little pixels around the screen. A new video accelerator with its own memory will take the load off your processor and give your display a real boost. You'll pay anywhere from $150 to $300 for a good one. If you can afford it, get a card with two megabytes of onboard video RAM.

So much for the basics. To take advantage of the new generation of multimedia programs, you'll also need a sound board and a CD-ROM drive. You'll get the best value with a multimedia kit that comes with bundled software (typically an encyclopedia and several game titles) for $300 to $500. Make sure you get a 16-bit sound card and, if you have the money, a quad-speed CD-ROM instead of an older double-speed model.

There's your checklist. Now you need to figure out which items you need. If the answer is "all of the above," a little arithmetic will show you that you're better off buying a new computer. But if, like Jenny, you've improved your PC over the years, an upgrade may be a better choice.

Her machine has an Intel 80386 processor, a hot ticket in the early Nineties that is definitely too wimpy for today's software. Since her memory chips and hard disk are salvageable, her best bet is installing an 80486 motherboard with a new video card for about $500. The kids will think they've gone to warp speed, and the hourglass won't be a permanent guest on the screen.

When I gave her my advice, Jenny approved. But then she added that she might go a bit further.

"I've never liked the way you have to put the computer on the desk with the monitor on top of it," she said. "At the shop they told me they could put everything in one of those minitower cases that stand up."

If you do that, I told her, there won't be a single piece of the original computer left.

"You're right," she said. "It's the ultimate upgrade."

You can reach Mike Himowitz via E-mail at mikeh@clark.net