If you’re like most folks — who haven’t just won the lottery, gotten a substantial salary bump or bonus at work, or been gifted a giant chunk of change — buying expensive items may require some good strategy. Part of a wise approach to sensible shopping is dodging foreseeable downfalls.

Below are some really common pitfalls people make with large purchases. Now, with your growing awareness — you can own the marketplace!

 

What Qualifies as a “Large Purchase”?

This is fairly subjective. What’s a stretch for one person may be couch-cushion money to another.

But, to get into a frame of thinking, the following may be high-ticket items or occasions for the average Joe or Jane:

• Art or collectibles
• Education
• Electronics
• Estate planning and other legal services
• Having a family
• Healthcare
• Holidays, weddings, and other special events
• Furnishing or remodeling a home
• Jewelry
• Moving
• Real estate (land, homes, investment properties)
• Starting a business
• Vacations and other travel
• Vehicles (cars, RVs, boats, motorcycles)

 

Buying Big? Don’t Make These 9 Blunders!

Don’t let your shopping spree cost you too dearly. By sidestepping these expensive and potentially ruinous errors, you can have more confidence in your spending choices and control over your financial wellness.

 

#1 Getting Stuff You Really Don’t Need

We’re all guilty of this one! But with an expensive item, it can feel a whole lot more pronounced. It can also box you in so that you aren’t able to get or do something that actually means something to you.

Before you do whatever’s the equivalent of “hitting the process order button,” stop and take a breath. Literally ask yourself, “Do I need this? Do I *really* want it?” By taking a moment, to think logically you can disrupt that adrenaline-fueled autopilot that’s controlling the purse strings.

 

#2 Spending Money You Don’t Have

The stats on debt in the US are staggering. When you go into massive debt or add to debt you’re already lugging around, you’re not just becoming a statistic — you could be sacrificing your long-term financial health.

Furthermore, life under the burden of debt can be harmful to more than your bank account and credit record. It can take its toll on your health, relationships, and more.

We recommend creating a reasonable budget and sticking with it. Living within your means can be empowering and gratifying!

 

#3 Playing Money Games

Moving money around gets real old, real fast. And sometimes it just creates the illusion that you have the funds to justify that costly acquisition. Basically, this is a “stealing from Peter to pay Paul” situation. Underneath it all — you still may not be able to truly afford the large purchase.

Having an honest conversation with yourself (and/or family) about the state of your finances is a better practice. It’s a gateway to understanding how your cashflows factor in to your purchasing power and to sustainable robust money management.

 

#4 Not Planning Ahead

Impulse purchasing may not be an issue when you’re talking about a pack of gum at the grocery checkout. But when you’re talking about stuff with hefty price tags — that can be another matter entirely.

If you don’t plan ahead, you have no way of saving money over time for a large purchase. This can lead to a situation of hardship for you or your family because it can throw your budget out of whack.

And, failure to plan can have non-monetary consequences, too. Trying to accommodate a huge and unexpected purchase can have lifestyle, logistical, or other impacts.

So, take the time to work your big buy into your budget and your life.

 

#5 Not Checking Your Credit Score

The more creditworthy you are, the better terms you’ll get and the lower your overall spend will be on your purchase. The less favorable your credit history is, the more you’ll end up paying in the present as well as over time.

Either way, knowing your credit score helps put you in the driver’s seat. You’ll know your position when you enter into negotiations. Or, you may even find that your desired purchase is not within reach just yet….

 

#6 Not Shopping Around for the Best Deal

There’s two sides to the coin of hasty purchases:

1. Not getting the return on the dollars spent. This could be in the form of not getting the lowest price for a given item (e.g., paying $5 for something that’s only $4 elsewhere) or it could be not getting as many features for the same amount of money (e.g., paying $20 for X when you could get an XYZ bundle for $20 elsewhere). 
2. Leaving free money on the table. Sometimes you don’t even have to look very hard to find promos, coupons, discount codes, rebates, etc. If they’re available and you’re not taking advantage of them, you’re letting your large purchase be more costly than necessary.

Browse (and compare) before buying so you don’t short-change yourself.

 

#7 Not Reviewing Store Policies

EULAs, refunds, returns, restocking fees, etc. Worse than making a large purchase and not finding it satisfactory is discovering — after the fact — that you can’t change your mind and get your money back.

Reading the fine print before committing is important. Every store has its own policies and you’ll want to be clear on those in advance.

 

#8 Not Considering Ownership Costs

A lot of people overlook optional and required costs of ownership until it’s too late. These might include ongoing or one-time outlays for things like:

• Manufacturer’s extended warranties for your appliances and electronics
• Tech support package for your new computer
• Additional renter’s insurance to cover of your engagement and wedding rings
• Homeowners insurance, taxes, and maintenance
• Auto insurance, gas, and upkeep

These all come at a price that needs to be factored into the lifetime price of your purchase. You’ll have to do some due diligence and then use your best judgment to determine which ownership costs you’ll be on the hook for. Then, make sure you account for it when sizing up your overall spend.

 

#9 Not Learning & Applying Lessons

Listen, everyone makes mistakes — that’s natural and OK. The key is to learn from past errors so as to not repeat them (and the headaches and heartburn that tag along!)

Do whatever you need to ensure that you’re set up for consumer success. This could be anything from setting up automatic bill paying to creating a dedicated savings account for your large purchases.

 

Valley Credit Union — Your Big Resource for Large Purchases

Need help with how to save money over time for a large purchase? We hear you! VCU has plenty of ways to make big expenses more manageable — from savings accounts to loans and lines of credit to planning tools. Plus, our friendly and knowledgeable staff is ready to assist you. Just click, call, or come in today!

About the Author

 Justin Roberts, Vice President of Lending

Justin Roberts is our Vice President of Lending and has been in the financial industry for over 18 years. He is an Oregon State University Graduate and has just completed Western CUNA Management School. When he is not focused on helping the members at Valley, you will find him coaching his two sons and volunteering his time to help develop the youth in our communities through sports.