Life’s Big Purchases: Smart Steps to Realize Your Dreams Without Going into Debt

Big Purchases
Every so often in your life, you’ll find a need to make a big purchase such as a home, car, or boat; while this can be an exciting time, there are a few things you need to be aware of.

If you’re ready to make a purchase with a big price tag, you need to make sure that it is the right time in your life to do so. Many people have bought a large-ticket item and soon regretted it. Just keep these three things in mind when you’re ready to make a big purchase and you should have no trouble.

Set a Budget

The most important thing you can do is to set a budget. You need to evaluate your current and future financial situation and see if you can afford to buy that new Chrysler 200 or dream home.

Above all else, be honest with yourself. Don’t just think about your financial situation, write it down. Be sure to include everything: your take-home salary, your current rent/mortgage, utility bills, vehicle payments, student loans — write everything down so that you can plainly see how much money you have available at the end of each month. Chances are, you will not be paying for a big-ticket item with cash, so you will have a loan that needs to be paid back.

This will help you determine how much you can spend, and once you have that number, stick to it.

Shop Around

Don’t just go to one store and make your purchase there. Visit several different businesses and see who can offer you the best deal. Weigh the payments versus the initial and total costs. One place may have a great interest rate and lower payment, but will charge you more overall. Think about what offer is best for you.

With the internet, you can do comparison shopping easily from your own home. You can visit several sites and see if the price varies much. Sometimes, you may even find a deal that you would never find at a brick-and-mortar store. Many stores also offer price matching, even from the internet, so you can still buy locally but get a great deal you otherwise wouldn’t have.

Watch Out for Catches

When you’re ready to buy, take a good look at the terms offered if you will be making payments. Many companies will offer you free financing, or “two years same as cash,” meaning that the interest will not kick in for a while.

These may seem good at first, but make sure there are no hidden catches. Companies will often offer great initial deals and then hit you with a large fee for one late payment, or even raise your interest rate nominally if you don’t meet certain criteria.

Read the purchase agreement carefully, and there is a catch that gives you pause, rethink the deal before you sign anything.

Don’t miss out on a dream purchase. Think things through and you will be fine.

Lauren Waters has 4 kids so money has always been spent wisely, with care not to rely on credit cards. Recently starting a new self-employed business venture Lauren writes about how you can live your dream if you’re careful with the money.

Photo: American Advisors Group

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