If you’ve read enough personal finance blogs, then you’ve probably read enough scenarios about giving up your grande mocha-chino in order to save more money. I understand the reasoning for being more conscious about controlling the spending on life’s smaller luxuries. I tend to think in bigger terms when it comes to saving money. There are a handful of large purchases that you will make many times in your lifetime, and you can save a chunk of money if you control these expenditures rather than how many times you rent a movie in a month.
You’ll hear me harp over the fact that we are obsessed with four-wheel toys. Americans love cars, and it is almost as common as a mortgage for someone to have a car loan. I have literally seen car dealers look at people like they are crazy when they pay cash for a car. Why would you borrow $20,000 for a new car? Do you NEED a new car, or do you WANT a new car? I read a post from a prominent personal finance blogger that justified his new car purchase based on the reliability of new cars and some other factors. The fact is that buying a new car, or just a car that you can’t afford is a LUXURY. If you start paying yourself a car payment every month, and keep upgrading in car every year, you’ll be buying new cars with cash in 5 – 7 years. You’ll save literally hundreds of thousands of dollars in your lifetime if you buy used cars and never get a car loan.
This is the biggest legitimate investment that you’ll buy in your lifetime. Yet so many people neglect their home and end up putting their money in personal property that depreciates rather than putting into a home. If you are a homeowner, maintain it like it’s your job. Make improvements that add value to your home and property. NEVER buy a house with no money down. You need a cushion just in case the housing market goes sour for a few years. If you do this, you’ll make a profit with every house that you sell.
I am all about vacations. It may sound like I hate having fun, and I’m a tight wad, but it is quite the opposite. My wife has to put a clamp on my wallet when it comes to planning on and going on vacation. I love to travel, and I would much rather spend my money spending time with family and friends on a trip than buying a new toy. The truth is that we tend to go overboard when it comes to vacations. Have a budget and stick to it. Try to get package deals that will save you money. Go on vacation in the off-peak months. This can save you hundreds of dollars from the beginning. Visit less toursity destinations. Central America has great beaches, and it is still much less traveled than the Caribbean.
Don’t get me wrong, I think we need to be mindful of the small things we buy throughout our day, but there are much bigger purchases to be thinking about that can save us thousands of dollars over a lifetime. Personal finance is mostly about behavior. You are in the driver’s seat to a path of financial freedom or financial bondage. The choices are yours to make.