Have you been eyeing that new TV? Or perhaps the latest techno-gadget? Whatever that “big ticket” item is, it’s important to have a plan for how you’re going to pay before you walk into a high-pressure store-financing deal and, ultimately, lose more money from your pocket.
Step 1: Determine Your Needs
The first step, according to SmartAboutMoney.org, is to determine if this is a necessity or a luxury. Translation: do you need it, or just want it really bad? This is important when determining how you plan on saving for that item so you can contribute more frequently to a “need” and less frequently to a “want.” It may take longer to get the “wants” checked off your list, but your necessities will be met first!
Step 2: Save Save Save!
Open an interest-bearing savings account. This could be a money market account or perhaps a CD if the purchase planned is for some time in the future. Be sure to contribute funds regularly to watch your savings grow (and your interest, too).
Step 3: Avoid the Credit Crunch
Stores will all offer you some kind of financing for a large purchase – most of them are very tempting with offers of 0% interest and no payments for a set number of months, etc. But what happens when that set time frame is up and you have not paid it all off? You can expect extremely high interest rates and charges and a monthly payment that you weren’t budgeting for.
Step 4: Figure out what you can get rid of – and sell it.
If you’re buying a new TV, make room for it by selling your current one. Buying a new furniture set? You’ll need to get rid of what you currently have. Using free listing services such as www.craiglslist.com or low-cost classifieds through your local newspaper, you can earn fast cash to put towards that new item.
Step 5: Have Patience
Sometimes, simply waiting for the best deal can help you save a great deal. Be on the lookout for holiday sales and special discounts (like perks for purchasing online) that can get you more for less. Or perhaps, as in the case with electronics, wait for the next model to release in order to get the previous model for a fraction of its original price.
What are your tips for planning for a big purchase? Sound off in the comments below!