Smart Tactics for Every Consumer

Researching, Avoiding Emotional Spending and More

Are you considering a large purchase or investment? Do you need more (or some) money left at the end of each month? When is the best time to make – or not make – a purchase? Consider these smart tactics for every consumer:

Set a limit on discretionary expenditures.

Discuss this limit with your spouse or domestic partner, if applicable. For example, Tim and Mary have a $50 limit on purchases other than household expenses such as groceries or cleaning supplies. Anything over their $50 limit must be discussed before the purchase is made. In this way, both feel as though their opinions are taken into consideration before any larger-ticket items are bought. If you don’t have a partner to share the responsibility with, make sure you hold yourself accountable to your limit.

Not all purchases are equal.

Treating yourself to a gourmet coffee on the way into work isn’t the same as investing in new appliances or a new vehicle. Set a waiting period for yourself of 30 days for items over $100 but less than $500 and 60 days for items over $500. This will give you time to evaluate your options, research the item and best prices, and – most important – determine if the item is actually a “need” or if it is a “want”.

Research your purchase.

Ever suffered from buyer’s remorse? Could it have been avoided if you’d taken your time and done some research before handing over your hard-earned money? When researching purchases, take advantage of the Internet. Sites such as Consumer Reports, CNET (for digital items), the Better Business Bureau and even reviews on Amazon can help simplify the choices. Don’t forget to ask family and friends for opinions.

Avoid emotional spending.

That fabulous pair of shoes may give you temporary euphoria but the credit card bill will bring you back to earth in a hurry. Don’t substitute spending money for taking care of your emotions. If you’re feeling down and need a pick-me-up; treat yourself to a relaxing bubble bath with candles and music, take a trip to your library for a good book or movie, or take a walk in the park to appreciate nature. Cheering yourself up shouldn’t involve going further into debt.

Realize the actual cost of your purchase.

How many hours will you have to work to pay for this item? What are you giving up in exchange for this purchase? You’re. making a choice each and every time you spend a dollar; you’re choosing one item over another, the item over your time. the item over your savings and any interest you would accrue.

Also, your purchase may have other costs associated with it. For instance, buying a new or used car isn’t just the price of the car. You need to budget for maintenance such as oil changes and tire rotation, fees such as yearly registration and parking, insurance payments and fuel to keep the car running. You also need to budget for the monthly loan payment and interest that you have on the car.  Use Auto Credit Express’ Loan Calculator to figure out how much your monthly payment will be and what the interest rate is. When considering the purchase of a vehicle be sure to include the total of all of these expenses, divided by 12, for the true monthly expense.

For example:

Tim decides he wants an extra boost to psych himself up for the morning’s budget meeting. Weighing the cost versus the reward as well as the impact to his budget, he decides to stop at a Starbucks for a latte on the way to work. Knowing that the five dollars comes out of his weekly discretionary expenses, he chooses to spend the money but offsets the expense by taking his lunch to work.

Mary’s car broke down on the way to work. On top of dealing with an irritated boss after arriving over an hour late for work, she had to pay a $75 towing fee. The mechanic quoted a price of over $2500 to repair the 12-year-old vehicle. After discussing the situation with Tim, they created a car-sharing schedule for the next 2 months. Although each of them had to take public transportation several times and felt a loss of independence, they spent the 60 days assessing replacement vehicles. The cost to replace Mary’s vehicle – including insurance, registration fees, taxes, title transfer, maintenance, and car payments – was beyond what they were comfortable spending and chose, instead, to have the otherwise well-maintained vehicle repaired.

Reward yourself for your triumphs.

Finally, make sure you reward yourself. It is possible to set a realistic budget and stick to it. The greatest reward is watching your debt shrink and your savings grow. If you need additional incentive, set a goal and reward yourself for it. Every time you pay off an outstanding bill, add $20 to your vacation fund. Each time you cut up a paid-off credit card, schedule vacation time to take a morning off of work so you can sleep in.