10 Tips for Making Big Purchases

Avoid the Tricks and Discover the Treats: 10 Tips for Making Big Purchases 

A bit of planning can save you a ton of money when it comes to buying throughout the year.
With the year coming to a close, it’s the perfect time to consider replacing major items. However when it comes to making big purchases, there is a right way to do it and save money in the process.
1. 48 hour rule – This is also known as “sleeping on it.” Whenever you are considering a big purchase (“big” can be defined by dollar amount, time commitment, or consequences), it is never a good idea to buy something the moment you lay eyes on it. If you can wait 48 hours, you can avoid acting impulsively and take better stock of your resources.
2. Research and preparation – Is the deal you are considering the best deal available? Are there steps to take prior to purchasing? For example, if the big purchase in question is a home, have you reviewed your credit report to make sure you can get the best interest rate on a mortgage? 
3. Cash or finance – How will you pay for the item? As with the previous tip, if financing is your option, it is best to make sure your credit is in good shape. And then there is the research to be done on financing. You may get a better deal with a personal loan or credit union and bank financing than going with the retailer or dealer’s financing options. Regardless of the finance vehicle, it is good to be aware of how the payments will fit in your budget and how much you will pay in interest and other fees.   
4. Goal alignment – Also known as “needs vs. wants”, this concept sounds simple, but we can get so caught up in wanting something that we think we need it. Is this purchase your best solution or option to your current problem? If it’s an appliance, could repairs solve the issue? If it’s transportation, is a car the only answer? Reviewing how the purchase helps you meet your goals can help you decide if it is a good idea.
5. Used or new – This is a good opportunity to take stock of your values. Is it worth your time to research used options and possible repairs, or would you rather put money in place of time and by something new?
6. Rent, lease or own – When considering cars, houses, or even appliances, it is important to understand the true costs and differences between your options. Make sure to count time, maintenance, resources, insurance, utilities, fuel, etc. into the overall cost of the item. 
7. Financing traps to avoid – Rent-to-own, “pay no interest for 6 months”, and other financing tools can sound good but carry heavy costs.  If you anticipate a big purchase in your future, the best things you can do are: create a relationship with a reliable financial institution, review your credit, and make a realistic budget. Lucky for you, mpowered has financial coaches that can help with all three!
8. Best time to purchase – Often, we just need a big purchase when we need it, whether it’s the best season or not. But if you can anticipate your need, you can time your purchase to get a better price. For example, I knew our air conditioner was on its last legs, but I kept telling myself I could stretch it further. As a result, when the air conditioner finally quit, I had to buy a new unit at the hottest time of year. Had I been more proactive, I could have saved money by buying a new unit during the winter.
9. Prioritize – Is this big purchase truly necessary, and where does it fit with all of your other goals and ambitions? Can you put off a new dishwasher if it means you can take the holiday trip you’ve been wanting? Is a new car an absolute necessity or will a hefty car payment take away from other debt you have been wanting to pay down? When we’re in the store or looking at ads, it can be hard to remember that we might have more important purchases or investments to consider. 
10. Get help – Work with a personal finance coach, friend, or family member to sort through your options. Decide what is most important, create a plan, and then take the first step.
Check in with the Joneses to read more about their home and auto buying experiences, and learn more about the financial planning tools and resources available to you at www.KeepingUpCO.org.
About mpowered
mpowered is the only Colorado-based nonprofit resource for individuals and families in Colorado who want to learn about money management and participate in coaching to achieve their personal definition of financial success. Learn more at www.mpoweredcolorado.org.
About Bellco
Bellco is one of Colorado’s largest financial institutions, with more than $2 billion in assets and 20 branches in Colorado. Founded in 1936, Bellco offers a full range of financial products and services including mortgages, auto loans and checking accounts. Bellco is federally insured by NCUA and an Equal Housing Lender. www.bellco.org