Today we welcome my UK friend Joe as a guest to the blog! Enjoy. 🙂
We finance bloggers love to get frugal, whether it means using a teabag four times, buying reusable diapers, or using rechargeable batteries. The reality, though, is that the purchases that cause the most damage to our financial goals are the big ones.
The threats to our finances come in the moments where an unexpected emergency occurs and you have to make a big decision under pressure. Moments like these will make or break us, for example:
- You’ve found the perfect home but the seller’s lowest price is $10,000 above your ideal offer
- Your car breaks down and you’ll pay the mechanic anything to fix it ASAP so that you can get to work
- Your electricity bill is automatically deducted from your account before you’ve tried to haggle it down
So how do we deal with these ‘unavoidable’ tragedies?
Refer to your goals; think short term pain and long term pleasure.
Take a deep breath and make the decisions that will benefit you in the long run. Here are some alternative approaches to the above troubles:
- If you can’t stretch to buy the house without a major struggle then keep looking; there’s bound to be an even more perfect house out there for you!
- Get a second opinion and consider a cheaper mechanic. I’m sure work will forgive you if you explain the circumstances. If not, make the time up in your lunch breaks!
- Cancel that direct debit and pay online or over the phone for each bill; you’ll feel much more connected to your payment this way and might even find a way to cut that bill down!
Marketing is contagious, as is peer pressure. Like a common cold, it’s inevitable that at some point in your life you’ll catch the consumer bug and want buy that big TV or that new car. In the words of the famous Zig Ziglar, “Wait one month before making a major purchase”. In that time you might change your mind about whether or not you need it. While you are waiting, make sure you do your research. In the worst case scenario, you might find a cheaper deal!
Another great practice is to work out your hourly wage. Then work out how many hours, days, and weeks of work it would take you to earn that money back. Is it really worth it?
What are some other ways you try to avoid big purchases?
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