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.

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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

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Published or updated May 14, 2013.

Comments

  1. Good advice. This is especially true with electronics. By the time you saved up, you WILL get a newer model at a lower cost.

  2. MoneyEnergy says:

    Great way to inverse the usual splurging process, and a great new way to think about it. Might as well give YOURSELF that interest rather than the credit card company…

    If you’re going to take three months to pay something off anyway, you might as well do it in advance, and to yourself!

    I like it!

  3. Greener Pastures says:

    It’s amazing to me how often I end up “just not wanting it anymore.” The only thing I seem to always still want is more books. I’ve been using the library a lot more lately, though-

    Lisa

  4. Glen Craig says:

    @ Pinyo – I HATE when I finally buy an electronics item then find out two months later there’s a newer and better model for the same price!

    @ MoneyEnergy – Glad you like it! I’ll take giving me interest over a credit card any day!

    @ Greener Pastures – Yeah, I sometimes get obsessed over wanting something. Having a little time as a buffer can usually give me back my wits.

  5. There are many benefits to stopping impulsive buying! You pointed many of them out. The well-researched, thoughtful purchases are usually the ones we are glad we made!

  6. I had another thought to save money on your chosen “Thingamajig” (whatever it is). Maybe you could check on e-Bay for someone who got the item as a gift (and didn’t want it) or bought it hastily and decided to sell it. Maybe you could find one in like-new condition that someone realized they really didn’t want or need. That way i-f you buy it after saving and consideration, you could save even more money on your “Thingamajig”!

  7. While you are saving for your Thingamajig, look for one at yard sales and thrift stores. You may find one, and be able to use the money you are saving for something else. Who needs the latest greatest model when it comes to electronics, anyway?

    • Glen Craig says:

      @ Betsy – Yard sales and thrift stores are a great idea! Sometimes with electronics you do want the latest model but other times you are correct, we don’t always need the latest.

  8. Window shopping has always been a help to me. If I see something I think I really want, then I wait a few days or a week or so and go back to that particular store. If the item is still there and I still really, really want it, then I’ll buy it. This way I have a chance to think about it and save for it.

  9. Great idea. Now I just need to move from idea to doing it.

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