Big purchases don’t happen every day, but they can have a significant negative impact if not done correctly; one consequence is consumer debt. Avoid these three big purchase mistakes and the debt that goes along with it.
How to Avoid Consumer Debt With Big Purchases
Appliances break, the TV won’t seem as new anymore, and the deck sure would look good with a table and chair set. How do you successfully navigate needing to spend money on a big purchase without ending up with consumer debt?
Splurging Without Saving
The first mistake to avoid is splurging without saving. A big purchase does not necessarily mean you will end up in financial trouble. Planning ahead for large expenses in your budget is an excellent way to avoid credit card debt.
If you know the roof needs to be replaced in five years, start saving small amounts now. For more timely purchases, like a new patio set, do your best to anticipate the need ahead of time. Take a few months to save up for the purchase.
Impulsively shopping is another dangerous financial trap of big purchases. New shiny things are hard to walk away from! Taking time before you make a big purchase is key to avoiding a financial mistake.
Unless a huge, once in a lifetime sale will expire, a good piece of financial advice is to take some time, and “sleep on it.” You may feel differently about the model or the color or the purchase, in general, the next day.
Needing an “Upgrade”
Sometimes it seems like an upgrade is a necessity. Maybe there have been some TV resolution improvements since you bought yours a few years ago, or the new iPhone just came out on the market.
Think through any upgrade that you might be considering. Is it crucial to my day-to-day? Is it preventing me from doing work or another essential part of my life? Could that money be saved and used for something more important, like debt reduction?
Try not to get ahead of yourself without having the cash to back up your excitement. There are no guarantees against job loss or anything else that might threaten your ability to pay credit card debt.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.