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What qualifies as a “big” purchase will differ from person to person and household to household: a new computer, car, home, or yacht are examples that span the range of possible big-ticket items. No matter how high or low your household budget may be, big purchases are by definition anything that needs careful consideration before pulling the trigger. There’s nothing worse than spending a substantial amount of money only to learn of the unexpected consequences or buyer’s remorse that go along with it.
How do you prevent this from happening? It’s actually not that difficult, as long as you do your due diligence ahead of time. Here are 3 important things to consider before making any large purchase.
There’s no denying that buying new stuff is fun, and big purchases can be especially exciting. This often makes it far too easy to talk yourself into buying something you don’t really need, and companies spend millions of dollars a year on advertising to convince you to do just that. With all that in mind, before your next big purchase really ask yourself whether you really need or can afford the item you are considering buying.
For example, your current car may be old and banged up, but does that necessarily mean you need a new one? Every cent you don’t spend now is money that can be invested in your future for things like an emergency fund or retirement contributions. Most of us have a limited budget to begin with, so it’s important to separate your needs from your wants when contemplating a large purchase.
Many big purchases end up having hidden costs that are only revealed once you’ve already paid for them. In the lead up to a big purchase, it’s essential you find out if there will be any hidden costs involved. Taxes on any purchase should be calculated beforehand and considered part of the item’s total cost.
Also, all big purchases aren’t created equal. Cars and houses especially have a substantial amount of ancillary costs that go along with their purchase and upkeep. It is essential to thoroughly research the costs associated with this category of significant purchases to avoid an unpleasant bite in the wallet down the road.
This won’t usually apply to purchases like cars or houses, but often other types of large purchases can be returned. Online retailers often have no-questions-asked return policies. Photography equipment, for example, can be bought online and the price tag on these items can easily range into the thousands of dollars. Finding out if you can return big purchases is an important step of researching where you’re going to buy from.
If you’ve done due diligence researching the big purchase you’re about to make, you might feel like you are ready to pull the trigger. Not so fast. More than anything, the most important part of making a big purchase is to allow an adequate buffer of time to help you decide if it’s really worth it.
Unfortunately, even for the purchases in life that we really need, we can often find ourselves short on cash. If this sounds like you, it may be time to start thinking about the benefits of an installment loan. They are a dependable way of getting emergency cash quickly, and the payments are spread out over several months, offering you the breathing room to catch up.
Making a big purchase can be a very exciting and fulfilling experience, especially if you have done your homework and made sure you are in a secure financial place where you can afford it without worry. You work hard for your money, and there is no shame in enjoying the fruits of your labors by treating yourself every once in a while.