All too often when we want something with a big price tag we end up plunging ourselves into debt just to get it. We open a new Best Buy card and get that 62” HDTV, or see the commercial for “No Financing until 2011” and finally get that living room set we’ve been eyeing up.
The problem is that if absolutely anything goes wrong, loss of an income, unexpected medical or car bills, we don’t have enough money to pay it all off. We end up needing debt relief or credit repair and are suddenly overwhelmed with credit card debt.
Anything that’s more than $1000 should probably be considered a major purchase. So what I’m trying focus on here is how to save up for it instead of just impulsively buying.
Create a List – All the big ticket of items you plan to purchase. Be sure to consider everything that might need replacing, like a fridge or the washer / dryer, other expensive necessities like your car, and even the things you don’t need, but want to buy. Like that new HDTV or living room set.
Estimate the Cost – For of each item, understand exactly how much you’ll end up spending. Ideally you want to make sure that when the time comes to make that purchase, you’ve saved enough to actually the afford it. It’s best to overestimate to be on the safe side.
Use a Calendar – Put every item on the calendar with your ideal to-be-purchased-on date. There are several ways to determine exactly when a purchase should be made. Obviously, if the washing machine is on its last legs, its purchase date needs to be sooner than later. You can’t always foresee the future, but generally you have a good idea of what’s brand new and what’s on its way out the door.
Do Some Math – Figure out how long you have to save for each item. Each item you’re saving for becomes its own budget category. Divide the estimated purchase price for each item by the number of months until it’ll be purchased. You can estimate your monthly budget contributions for each item.
