Continuing my series on 5 Common Money Mistakes, I think I’m ready to talk about my problem of not waiting or researching before making a big purchase.
I don’t plan to preach to you about how you should wait to buy something. You’re smart enough and don’t need me to say “Don’t let that money burn a hole in your pocket“. What I will describe are my own personal stories of spending without researching or waiting, and ask you some questions to help you ponder your own situation.
You may remember how we lost $14,500 through stupid mistakes when it came to our cars. We’re still paying off that negative equity on the Malibu loan. You see, I used to be a major impulse buyer. I drove onto the Acura lot looking for a used Volvo (don’t ask me why), and drove away in a sparkling new Aegean Blue Pearl Acura TL Type S. I lost $6500 on my Saturn trade-in in the process. But I loved that car and didn’t regret trading in the Saturn until I looked at my bank account. My first payments were $619 per month at over 9% interest.
I ended up paying $36,000 for a new car (before interest) that I bought for invoice at $28,000 because I didn’t research. And then I did it again when we traded in our sweet 2004 VW Passat GLX for a 2005 base Chevy Malibu. We lost $8,000 on that trade-in, and my wife and I refuse to talk about our mistake.
Are you an impulse buyer?
– How often do you just go out and dine at a restaurant when you could have made dinner at home with ingredients you already have? How about all those snacks you grabbed at the grocery store without looking at your budget, cupboards or wasteline first?
– How many times have you bought a DVD for full price when you could have just rented it or bought it at a discount a couple months later? Ever look into borrowing DVDs from the library?
– Have you ever gone into a Best Buy “just to look around” and walked out with hundreds or thousands of dollars in electronics?
– How often do you get a new car (even if it’s used)? Every year? two years?
My own parents spent over $5,000 on bedroom furniture when I KNOW they could have gotten it for half that price. They went to the store just to look for a new mattress, and walked out with a whole bedroom suite. I don’t even want to think how many YEARS they be paying it all off.
These personal stories are meant to help you reflect on your own spending habits. Are they a little out of control, or WAY out of control? I was WAY out of control for years. I didn’t really spend much money except when dining out and buying cars, but that was enough to rack up over $50,000 in debt in just a couple months out of college!
So please, research your budget (hopefully you have one), think whether you NEED vs WANT the new purchase, and then take some time to think it all over. For small purchases (within a few hundred dollars), take a day or week to think about the purchase. For big purchases, take a month or more to Research, Wait and Repeat.
Be sure to check out the rest of the series Fixing Your Money Mistakes: