12 Effective Ways To Afford Big Ticket Items

by Silicon Valley Blogger on 2008-01-2839

Sometime in the next couple of years, we’re going to be in the market for something big: a new car (or two!), yet another appliance to replace any one of the outdated ones we have, some much needed home repairs. For some people, they’re eyeing a down payment for a house or just preparing for the big changes that come along with having a new baby.

Those are some of the larger expenditures in our horizon, though we may all have different ideas on what we’d classify as “big ticket”: would you call it anything over $100? or how about anything greater than $500? Regardless of what “big” means to you, we all probably have the same reaction when faced with a need to spend a bit more than we’re accustomed to. I for one, often bristle at the thought of “spending big” and ask myself where the heck do I find the extra money to cover the charge.

It’s not a big deal if the expenditure is something you can plan out in advance, but it becomes doubly challenging when it jumps out and bites you when you least expect it. Just recently, Lazy Man had the unexpected pleasure of having a friend invite him to a wedding in Spain with such short (45 days) notice. Well I can completely sympathize with Lazy Man and understand his trepidation. These days, if anyone tries this on us, I’d be glad to provide them a couple of hyperactive “under 6 year old” excuses ;) . I doubt anyone would appreciate the distractions of a family circus in their wedding.

Car with ribbon bow


We sure can’t get away from a lot of these expenses, so what can we do about it? Let me give it a shot.

Strategies For Affording Big Ticket Items

#1 Windfalls and retroactive pay
Do you have an unexpected bonus or inheritance, or even a legal settlement in your future perhaps? But if you suddenly receive something out of nowhere, hold on to it for a bit and think of how you may want to use it.

#2 Tax refunds and rebates
Can you say “stimulus check“? We’re all being encouraged to spend whatever we get from the government to keep our economy humming along. Spend it I will but I’m avoiding the frivolous purchases and putting the funds towards our future car purchase.

#3 Wait, delay and save!
Sometimes you’re in a tight spot with a sudden expense, but fortunately, most big purchases occur far enough into the future to allow you to formulate enough of a plan to pay for them. So if you’re tight on money, the best strategy is to just sit and wait it out, while developing a savings program. An easy way to go about it would be to have a ballpark figure for the cost and amount you can save per month. If you are looking to save for a $1,000 vacation, for example, then you may try saving $100 a month for 10 months to achieve that goal.

We’re coming close to needing a few improvements done to our house, but because of my impending exit from the job circuit and preschool bills rising this year, we’ll have to push out those plans to a later date.

#4 Prioritize spending
Decrease spending on things you care less about in order to save for things you care more about! A lot of people forget that money is a limited resource — just ask those who carry tons of credit cards and who just can’t say “NO” to sales, offers and new inventory. The tradeoffs you make don’t have to be too painful if you’re able to prioritize your planned purchases and work on delaying gratification. It’s not that you can’t have everything… you just can’t have everything all at the same time!

#5 Negotiate
Just as you can probably work out better terms with your credit card issuers, you can also probably negotiate better pricing and terms with sellers or the salespeople you deal with, especially those who’d love to have your business. Big ticket sales can mean big commissions for those who are selling to you, so you have some leverage here.

#6 Make extra money
Try various ways to make more money. There’s a lot here you can do! Check out these ideas for helping you earn a little more. And finally, if those ideas aren’t enough, how about checking out our category on building income streams?

#7 Get help from family and friends.
This may not work for everyone, but it doesn’t hurt to try to talk with those who may be able to support you. If you’ve got great relationships, you may want to turn to those people with whom you have a mutual trust, to see if you can negotiate a win-win kind of arrangement. I find this to be a sticky matter though, since I have been on the losing side of such an arrangement in the past, but going forward, I’d formalize all financial agreements and transactions with loved ones to avoid any potential misunderstandings.

#8 Sell your clutter.
Do away with your mess and make money at the same time! Remember that cliche? One man’s trash is another man’s treasure. Try Craigslist, local classifieds, consignment stores, flea markets, garage sales, eBay and before long, your home will be spic-and-span while you’re one step closer to your target purchase.

#9 Look into layaways.
Some stores offer layaway plans at good prices and attractive financial terms. These plans are not like buying on credit since you are not receiving the item until it is fully paid for and there are minimal or no charges involved with such a set up.

#10 Do not rent to own.
Renting to own involves weekly payments for a big ticket item that you will be using and owning at a later date. Typical items that can be “owned” using this scheme are consumer electronics, furniture and appliances. Your weekly payment partly pays for the item and eventually, when sufficient payment is reached, you eventually own the product. Unfortunately, this scheme is expensive and you’ll be out a bunch of money before it’s over since these contracts usually run for 18 months and over. Cost is around two to five times retail value. Here are a few sobering examples:

Rent a $500 appliance for 18 months and here’s what you might pay in some states: under Michigan law, $1,267, or the equivalent of about 150 percent simple interest; under New York’s year-old law, $1,125, or the equivalent of 125 percent simple interest, and in South Carolina, $1,011, or just over 100 percent simple interest. A television with a suggested retail price of $500 could cost you $15.95 a week, or $1,244.10 for 78 weeks, plus sales tax and possible delivery or processing fees.

Yikes!

Furthermore, if you make late payments, the rent-to-own stores reserve the right to charge you late fees for pick up or contract reinstatement. This doesn’t really make sense if you can simply save $15.95 per week on your own until you reach the television’s target price of $500, which you can then own free and clear! These issues don’t necessarily apply when you’re leasing to own a house, which is another story altogether.

#11 Use coupons, rebates, discounts.
If you’re short on money, you can hunt for ways to bring the cost of an item down. If you can find coupons and rebates and shop around enough for discounts on the items you are interested in, you may just find that altogether, these resources would be enough to help you meet your purchase goals.

#12 Borrowing
This is something I don’t actively advocate but it would be my absolute last resort. I’d first try to make extra money before I go off and take on any debt. I personally avoid debt like the plague but if you’re in a bind, you may want to consider this avenue very carefully. Along these lines, you should cut down your high interest debt and see how you can work them down to levels that are more reasonable. Some folks have decided that they’re okay with borrowing from their retirement plans, especially if it’s for causes like a down payment for a house. Strategies like this really take a lot of discipline and responsibility to uphold, so make sure you understand the provisions of your plan (repayment rules, tax consequences, withdrawal penalties) before doing anything like this.

-ooOoo-

Making a huge purchase can be a proud moment but can also be a regrettable one. Before you take that step, make sure that you’re committed, comfortable and prepared. Lots of folks make buying decisions that have turned their lives around, and not in a good way — because they’ve done so impulsively or hurriedly. A few parting tips: the bigger the purchase, the longer you should try to sleep on it. And if you’re stretching really hard for the buy — it’s a sign that you should think twice and pull back. It’s not a good sign if you’re feeling nervous, edgy or uncomfortable after buying something (buyer’s regret?). Don’t overextend when you spend and you’ll find that you’ll enjoy and savor your dream purchase even more!

Image Credit: iVillage.com

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 20 comments… read them below or add one }

Early Retirement Extreme January 28, 2008 at 11:27 am

#13 – Selling shares or risking some medium term returns and selling a covered call on the same shares :-)

#14 – Borrowing the big ticket item is another option.

SingleGuyMoney January 28, 2008 at 11:42 am

#3 – Waiting and savings works best for me.

squawkfox January 28, 2008 at 12:01 pm

How about buying used?
I find buying other people’s big ticket items really makes the item less of a big buy for me. :)

Silicon Valley Blogger January 28, 2008 at 12:22 pm

These are really great points you’ve all added here. I think buying used definitely adds to the savings you get. I’ve purchased many used pieces of furniture and though I haven’t bought a used car yet, it’s now something we’d consider going forward.

And of course, why not borrow the item itself? But many times, it may not be practical. Maybe you can get someone to just give you the item outright! Sometimes people we know just may have a spare bed or fridge they could lend out. :)

SavingDiva January 28, 2008 at 1:34 pm

I agree that saving over a few months is the best plan. My car loan ends in a few months. I plan on putting away the $225/month that I was paying to my loan into a savings account for my next car purchase and car maintenance. I hope that I will be able to purchase my next car without a loan….

Ron@TheWisdomJournal January 28, 2008 at 1:38 pm

I wouldn’t “rent to own” but sometimes you can just rent some big ticket items that you really only need once or need to use only every year or so, such as recreational vehicles, cars, expensive power tools, large landscaping equipment, vacation homes, etc.

Vixen January 28, 2008 at 3:20 pm

#1 -I have an extra paycheck next month and am socking that away into savings.
#2 -My tax refund and the stimulus package are what is paying for a family vacation in October.

Lazy Man and Money January 28, 2008 at 7:10 pm

I think we could have handled that big immediate expense. The thing is that it would have set us back in some other area. The immediacy of the expense also pushed us into a “decide now!” mentality. When those happen I almost always choose not to do the activity.

RacerX January 28, 2008 at 8:04 pm

The biggest thing for me is to wait 24-48 hours to see if it is still a “great deal”

Jonathan January 28, 2008 at 8:41 pm

Love #8

It’s amazing how much money you can make from selling your crap. Ebay is a Godsend. I have found that anything remotely antique gets bid up to ridiculous levels. Now if I can just find a way to filter the dead beat bidders…

Mrs. Micah January 29, 2008 at 9:11 am

I’m thinking about affording some small-ticket clothing purchases by selling some nice, unused clothing (purchases I regret). It’s not big ticket, but it’s kind of big to me…

PT from Prime Time Money January 29, 2008 at 10:42 am

Great resource. Thanks for sharing.

Connie January 31, 2008 at 1:11 pm

My husband and I always do the saving part. And sometimes talk ourselves out of it completely unless it’s a neccessity.

Richard May February 7, 2008 at 2:37 pm

Regarding you incredible advice to not rent-to-own. Wow! What great advice to actually save $16 per week for nine months so I can buy a $500 TV and have it delivered. I would have never thought of that one. Wow! Save money. What a concept. Thank you for your astonishing advice. What an amazing sage you are. And, you use a 1988 article to reinforce your point. Don’t bend over backwards with the latest information. Wow! Your research and insight into the lives of Americans is incredible. Now I can live my life straight and narrow thanks to your incredible financial advice and research.

Silicon Valley Blogger February 8, 2008 at 5:22 pm

@Richard May… :D

I’m glad you liked my post. Somehow, you brought a smile to my face. I particularly enjoyed how you called me an amazing sage with astonishing advice. I love the compliment and I always aim to please! Keep up the friendly commentary *grin*! I’m just glad you saw the sense in my thoughts on rent-to-own. Glad to have obliged.

Minneapolis Wedding Photographer January 24, 2009 at 8:38 pm

Thanks for the great tips on ways to save. When you break it down, it really makes “dream” items seem so much more affordable!

Lyd April 2, 2009 at 6:21 am

Sell your clutter. You are so right about this one. I did it and I must say that it was worth it.

David

Kozan September 1, 2009 at 7:17 pm

So many people pay on finance just when something comes out. With technology products, the price decreases very fast, so if you start saving when it comes out or near there, by time you save the money, that product will be half price or even quarter of the price.

Consider a $1,000 laptop. 3 months later that laptop will be perhaps $600, but if you purchased it on finance at $1,000, you would likely pay back $2k or more!

Ed December 9, 2010 at 1:43 am

I’ d say #6 and #8 works best for me and should be pretty easy for anyone else.

Making extra money online isn’t that hard if you have a dedicated effort and a solid plan to follow. I’ve been a successful Internet Marketer for 10 years, and I can tell you it’s all come down to how much you want success. There are a lot of ways to make money online, as there’s a lot of ways to make money offline. If you want it bad enough you can do it.

I also think selling stuff that you no longer want or need is pretty easy. You can go through all the stuff you no longer want, and have a yard sale, or sell at the flea market. It”s really not that hard, and you can have that big ticket item sooner than you may have thought.

Sell Stuff Online January 31, 2011 at 12:54 pm

I agree with Ed, #6 and #8 are things that pretty much everybody can do. We all have high end things that can be sold. In my experience small items are usually not worth the effort.

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