When planning a big purchase, your budget and debt considerations need to be front and center in your decision-making process.
Cost of Items Vs. Cost of Ownership
Sit down and figure out yourbudget goals for this item. For example, if you are looking at used cars in Spearfish, SD, the make and model of the vehicle can impact your taxes and insurance rates.
Decide how much space you need and carefully review the vehicles available that fit your needs. Find out if the seller has a mechanic on-site, such as at a car dealership, and talk to them about the car.
If this is a private buy, get the car checked out by a mechanic you trust. If the seller refuses this request, walk away.
This cost of ownership consideration works for many items. An older used appliance may be cheaper, but it will cost more every month if it’s not energy efficient. An electric stove will cost more to use than a gas stove on a monthly basis.
Pay Cash
If you have the cash for the item you need, you may be able to negotiate a lower price. This is particularly important when it comes to buying a used car from a dealership.
One of the best things about paying cash instead of financing is that you have the power to decline the purchase. If you’re financing, the seller has the power to turn you down.
With cash in hand, even in a retail setting, you can turn the purchase to your advantage. For example, if you need a new refrigerator and your microwave is getting older, see if the store has a points or bonus program. You may be able to both enjoy a new refrigerator and get a discount on your needed microwave.
other valuable tips:
Tips Before Getting Equipment Financing
Making Your Mark: Ideas to Give Your Business a Better Image
Buy on Credit
Buying on credit may not sound like a bargain, but if you have the money for the object, you can get something for nothing. For example, if you know you’re going to need to make a large purchase, such as tires before you go on summer vacation with your family, make a plan.
Review the credit card offers that come in the mail, or find a card that offers points for things you use anyway. If you can find a card that gives you flight miles, Amazon points or free groceries from the store you already shop at,
- save up the money for the item you need
- pay for the item with the credit card that gives you the most benefit
- pay off the card with the money you’ve stashed away
- enjoy the card benefits for free
If the card has an annual fee, use the benefits quickly, and cancel the card. If the benefits are a one time boost to hook you, cut up the card, and use the benefits at your leisure.
If you’re smart about it and have the money, using a credit card or opening a new bank account for your vehicle loan can provide you with benefits that cost you nothing.
While many are trying to downsize and own less stuff, we still need to make purchases; sometimes big-ticket items. To reduce fees and keep your credit in good shape, either pay things off quickly or save up the cash to cover the debt immediately.
Image Credit: save money on big purchases by twenty20.com
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GUIDE: business tools for decision making (YYY)
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