Every now and again, we find ourselves in a position where we need to make a larger purchase outside of our predictable bills. This can be anything from a new roof, an upgraded car, or a replacement for a dilapidated appliance. Many times, when we are faced with an unexpected expense, the pressure can cause stress and lead to poor decision making. When in doubt, take a deep breath, and follow the steps below when making one-off purchases. 

Know Your Budget

It is always important to sit down and decide what you can afford before making a big purchase. We often see folks spending beyond their means when they don’t take the time to establish a true spending budget for new purchase. If you are purchasing an item outright, examine your liquid assets to insure you have enough without exhausting your emergency reserves. If you go with the financing route, take a look at your cash flow to ensure the monthly payments are doable with your current spending habits. This is an easy way to prevent putting yourself in a compromising financial position due to lack of preparation. If planning for home improvement projects, put aside an additional 10-20% for unexpected costs, because we all know how that goes.


Do Your Research and Get Price Quotes

Never go with the first presented option when making a larger purchase. Do your research, see what is available and be patient. With the internet, we live in a very “price efficient” world and price competition is more prevalent than ever. If you have the flexibility, identify any upcoming sales that may help keep money in your pocket. 


Explore Your Financing Options

When preparing to spend a chunk of change on a new item or service, it is always a good idea to know your financing options. In some instances, it may make more sense to utilize a low or no interest financing option versus pulling money from your investments to make ends meet. Does the provider where you are making the purchase provide a 0% interest financing option? Do you have access to a 0% interest credit card offer to pay off the item over a certain term? Do you have access to a home equity line of credit that can provide relatively low-interest financing and the opportunity to deduct the interest, if qualified? These are all questions to explore when planning for a purchase. 

When it comes to making big purchase decisions, it is typical to experience sticker shock or in-the-moment, adrenaline driven decisions. Next time you find yourself needing to spend additional dollars on a larger item, take a moment to follow the above steps. Or better yet, reach out to your CERTIFIED FINANCIAL PLANNER™ at Sharkey, Howes and Javer to discuss your options. 

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