Buy That Fun Stuff Without Going Into Debt

Cash Register

You want to buy that new something.

Maybe it’s the Nintendo Wii and the Wii Fit?  Maybe it’s a new digital camera?  Perhaps it’s a new flat-screen TV or a GPS?  You can’t afford to buy it out-right.  If you charge it to a credit card you will be paying interest on top of the price of the item.

What if there was a way to buy the item and earn interest?  What if we can help make sure you buy it at a great price?

Sounds interesting right?

I’ll tell you what we’re going to do.  First off I have to tell we’re going to wait to buy this item.  Bummer I know.  You want it now.  But you don’t have the cash and paying interest on it, as well as being in debt, isn’t a great option.  Deal with it.

We’re trying to be responsible here and still get our new thingamajig.

Do you have an online savings account that allows you to create sub-accounts?  Good.  Now go into your account and create a sub-account titled Thingamajig (or whatever it is that you want to buy).  This is where you are going to save your money.

Now what amount of money can you put away into this account monthly without hurting your budget?  Can you cut back on Starbucks or something similar every week?  What would you expect to pay on your credit card if you charged it?  That’s a good amount to start with too.

Figure out how much a week this comes out to.  Go back to that sub-account.  We’re going to set up an automatic, weekly withdrawal into this account.  Why weekly?  This way you can see the money building up quicker.  I don’t want you getting impatient waiting for a monthly addition to the account.

Now we wait until the account fills up with the cost of your thingamajig!  This can be tough as you’ll test your patience but it will pay off.  Resist cashing out until you have the full amount to cover the purchase (you calculated taxes, accessories, possible warranty, delivery, etc…into your cost already, right?).

Here’s where this plan is great:

  • You earn interest while you save! – Every month you save you’re helping yourself with the interest you are earning rather than paying a credit card company interest for the privilege of using their money!
  • You now have time to do research - Go check out the thingamajig in a few different stores and ask the salespeople about the item. Go online and read consumer reactions. Check everyone’s price and see what locations give you the most bang for your buck (do some throw in accessories or have better return policies should something not work?).
  • A new improved model may come out – In the time you’re saving you may find that a better version has come out. Maybe the first was discontinued. Technology changes rapidly. today’s top of the line cell phone could be a clunker after a little while. It could be another company now has a better product.
  • The price could drop – Look at that. Now the thingamajig isn’t even as expensive as it was. You’ve earned interest and saved on the cost!
  • You may find you don’t want it anymore – This may sound crazy but in giving yourself some time to save and watching your savings grow you may not feel the thingamajig is worth the money anymore. Maybe it was just a fad that’s already faded? Either way, you now have a little extra to add to your savings. Sweet!
  • You became more responsible with your money - You didn’t go into debt buying your thingamajig. You set up a savings plan and stuck to it. You might have even looked at your expenses and found some things you didn’t really need in order to save quicker. What you were saving is now extra savings for you if you choose after you buy your thingamajig!

There you go!  You got your thingamjig, you didn’t go into debt, you earned interest to help pay for it, and you got the best possible price for it.

I bet it’ll feel good when you get home and open it up!

photo by skippy13

Five Things Indiana Jones Can Teach Us About Personal Finance

Indiana Jones Lego

I saw Indiana Jones and the Kingdom of the Crystal Skull (among all the prior movies).

Was it as good as Raiders of the Lost Ark?  How many movies are?

Was it a lot of fun to watch? Absolutely!

I got to thinking about ‘ole Indy.  What makes him successful in his movies?  What is it about him that keeps him coming out ahead?  And can those qualities be translated to personal finance?

Here are five things I think Indiana Jones can teach us about personal finance:

Indiana Jones doesn’t need a lot of stuff

When he goes off on an adventure he has a few items: His whip, hat, jacket, side bag, boots, pants, shirt, gun holster, and notebook.  This is basically his adventure “uniform” and it doesn’t change.  Indy makes do with what he has and makes his stuff last.  Ever see him buy a new hat?  How about shiny new boots?

How this translates for us: Find out what you need in your life.  Note the word “need” and not want.  Don’t clutter your life with stuff.  Stuff takes up space and uses up money. Also it usually pays to buy quality when you can. If you take care of a good item it can last many years (like a trusty fedora hat).

Indiana Jones has focus and persistence

When he has a goal he goes after it with all of his focus until he can’t continue any more.  Do Nazis stop him?  Angry cult member?  Communists?  Even his enemies recognize this quality in Indy.  Think of the times he’s been caught, kidnapped, or blackmailed into helping the enemy.  Indiana Jones is the go-to guy if you want an artifact found.

How this translates for us: Create personal finance goals and stick to them.  Are your goals worth fighting for?  Will you retire?  Will you be financially independent?  Develop persistence and focus to stay on track with your goals and complete them.

He’s daring, brave, and well educated

There’s times where Indy is doing some crazy things (climbing into an archaeological dig surrounded by Nazis anyone?).   What keeps Indy afloat when he goes off on a daring adventure?  Luck has a bit to do with it.  But it’s his education that tempers bravado. R emember, not only is Indiana Jones an adventurer he’s also a doctor of archeology that teaches at the university level (and a Boy Scout).  A big part of why he’s successful in his adventures is because he’s already done extensive research on what he’s going after.  As wild as he sometimes seems he doesn’t blindly go off looking for adventure.  He’s put years into learning his subject.

How this translates for us: Don’t blindly make investments or make purchases without out doing your homework first.  Educate yourself about personal finance.  Keep learning.  Know why you are putting money into an investment and understand what the risks are going in.  When making a major purchase study up on different brands and their reliability and consumer responses.  Try to find the best value and price (maybe you can pick up a really good hat).

He carries a notebook full of information

We see Indy go back to small notebooks all the time.  Whether it’s looking up a map or deciphering a language, he keeps notes on all his research.

How this translates for us: Keep your own notebook.  Track your expenses to see where your money is going.  Keep notes of things you did that saved money.  Make to do lists to stay on top of your life.  Write out grocery lists so you only buy what you planned on.  And these days there are so many apps out there for notes that you can’t use not wanting to carry a notebook as an excuse.

He tries to do the right thing

There are many times Indy can get quick cash by obtaining an artifact and selling it.  But he doesn’t.  He tries to do the right thing.  Whether it’s saving children from slavery or keeping biblical artifacts from Nazis, Indy does the right thing.

How this translates for us: Act right in your life.  Don’t lie to your spouse about finances however small the lie may be.  Don’t take part in get rich quick scams – they don’t work.

There you have it. Five ways we can learn about personal finance from Indiana Jones.

Can you think of any more?

photo by Gaetan Lee

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