How To Plan For A Major Purchase

There are a few big ticket items that most people will purchase at some point in their lives. To make the best possible choices you need to effectively plan before you sign on the dotted line.

At some point we will all make some kind of big purchase whether that is a house, car or saving for college. Each of these purchases requires a great deal of thought and planning beforehand to get the best deal and make the best decision for your unique financial situation.

Save For A Down Payment

For many big purchases, especially a house or a car, you will need to make a down payment. Most people don’t walk around with a huge chunk of cash ready to go to put down on a home so you will have to start saving once you know that you will want to make this purchase.

Best practice for a home or a car is to put down about 20 percent of the cost up front. Depending on how much you are willing to spend this may be feasible or not. For a car this is much more reasonable for most people.

If you cannot put down a 20 percent down payment when purchasing a home you may have to get private mortgage insurance, which can add more costs to your monthly payments.

Be Specific In What You Want

Before you even start looking or saving, figure out what you want. How large of a home do you want? What neighborhood? What is your price range? If you don’t know these specifics you will have no goal in mind to start saving for.

Be Realistic In What You Can Afford

Having a fantasy home or car is great but when you are thinking about buying you have to stay within your means. If you cannot afford a new car, get a used one! If you are looking for a home try a smaller one or a fixer-upper.

Analyze your finances, credit and spending habits before you begin shopping around to determine what would be best for you. What would fill your needs but not be a financial burden to you?

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