Before You Make Large Purchases
It is important to make sure you are ready to make a large purchase. The definition of big purchases can vary from person to person. For the purpose of this article, a big purchase will be defined as any amount for over $500.00. Your household income or situation may make a big purchase a much lower or a much higher number, but it is important that you stop and ask yourself seven questions before you make the purchase.
Do I Have Cash to Pay for the Item?
If you can afford to pay cash for the item without depleting your emergency fund then you should be okay purchasing the item. This means that the purchase should not adversely affect your current monthly budget. If you do not have cash for the item then you need to consider ways to make do or do without the item, while you save up for the purchase. You should avoid making big purchases on credit cards.
Do I Really Need This Item?
The first question helps you determine if you need the item or if it is a luxury purchase. If it is a luxury purchase you should be sure that you can afford it and that you can pay cash for it. If it is a true need, then you need to determine why you need it and when. For example, you may need a car, because yours is absolutely shot, but you do not really need the flat screen television set. Determining if the purchase is a want or a need can help you to prioritize it in your budget.
If You Do Need the Item, Do You Need It Right Now?
If you do need the item, but you do not currently have cash for the item is there any way you can do without the item for a short time. For example, if your dryer has stopped working, and you need to purchase a new one, can you hang your clothes out to dry or can you use a laundry mat while you save up for a purchase.
Using a laundry mat actually takes less time to do all of your laundry. You may be able to borrow the item from a friend or family member while you are saving up for the purchase. You can set up a sinking fund to help you save up the costs.
Can You Find a Used One that Will Work?
Looking for used items is a great way to save money on a big purchase. You can buy lawnmowers, refrigerators, freezers and almost any other item used for a fraction of the cost of a new item. Often you can buy professional grade appliances and tools this way and end up with a better quality item at a lower price. Take time to research your items to determine if this is a good option for you.
Is It Worth the Investment to Purchase the Higher Quality Product?
It may be worth the money to spend extra to get the top of the line product that will hold up to the wear and tear that you put on it. For example, you can purchase an average vacuum cleaner at a store for anywhere from $50.00 to $80.00, but these vacuums often break after one or two years. If you purchase a more expensive vacuum for $300.00 with a five-year warranty on it, you may end up saving money when compared to buying four or five cheaper vacuums. This is especially true if you can the expensive vacuum on sale.
When Does the Item Usually Go On Sale?
There are cycles of sales, and if you can wait a month for two you can save a bundle by waiting for the sale. For example, the best time to buy a lawnmower is in October when stores are discounting them to make room for winter items. Here is a more detailed list.
Have You Done Your Research?
When you purchase a big ticket item, you should take the time to thoroughly research the reviews and issues around the product. You should find a product that has the features you want at the best value. Read product reviews, check out reports on the durability of the product, and even check the resale price to see how well the value holds up. Once you do this, you can be sure you are making the right purchase for you.