Let’s talk about how you can avoid debt by properly building a solid savings account. I personally know how daunting it can feel when you’re trying to save money but you find yourself in a rut due to unexpected expenses.
The moment you start to save up for large purchases such as appliances, furniture or electronics life can quickly throw you a curveball. Not to mention, you finally get enough time off from work to indulge in a very nice vacation, and then the unexpected happens.
Do you forego your large purchase or do you apply for a new credit card or a new loan? Maybe you already have an existing credit card that’s burning your pockets, waiting to be used. We have been mentally trained to think that we don’t have another choice.
You can still make a big purchase without getting into more debt. Of course, this will be a reflection of how patient you are and how strategic you are with your saving plans.
However, I think it’s crucial to build an emergency fund before thinking about your next big purchase.
Here are the 6 Steps You Can Take to Help You Avoid Debt When Making Large Purchases.
1. Side Hustle
If you have some extra time, you should consider starting a side hustle. A side hustle can be something you enjoy doing or just a part-time job to help you build an extra income. If you work full-time in an office, then consider getting a side hustle you can do from the luxury of your home.
There are a lot of opportunities for those with internet access and a computer. There are also opportunities that can be done from your smartphone. The possibilities for building side income is endless.
Here is a list of some of my favorite side hustles:
Freelance Proofreading Jobs: As a proofreader, you will be responsible for checking written documents for spelling mistakes or grammatical errors.
Freelance Transcription Jobs: If you have good typing skills, good attention to detail, internet access, and a computer then you might want to consider this as your side hustle. >>Check out my article here to get started>>.
Virtual Assistant: A VA is responsible for helping business owners with small or large tasks that they aren’t able to complete themselves. Some of the main things you can do as a VA is social media management, appointment setting, content creation, email management, marketing, and administrative tasks.
Dog Sitting & Boarding: With Apps like Rover you can find opportunities in your local area to board or walk dogs while the owners are away at work or on vacation.
Taskrabbit: This is a mobile app that outsources small jobs in your local community. You might find jobs like cleaning services, delivery services, moving services, or handyman tasks. >>Check out my article here to get started>>.
2. Need or Want?
When you think about making a big purchase it’s important to determine why you need this item. For example, I remember when the front load washing machines came out, I immediately had the “shining object syndrome”.
We had purchased a nice GE washing machine for less than a year and a half ago. This large purchase was based solely on my wants.
I didn’t need a new washing machine, my current one was working great. I didn’t have the budget or the savings for it, but I could image this new washing machine in my home.
You have to decide what’s important. Do you impulse buy based solely off of your wants? The answer is simple. No.
You should create a plan to purchase the items you really want. Nevertheless, I ended up not purchasing the washing machine.
For one, I didn’t have the money saved up for it plus after a few months, I decided it wasn’t that important. Sometimes we can fall into the trap of impulse buying. Avoid this type of behavior at all costs.
Decide if you really need it or if you just want it. Then determine if you have the money to cover the expense or if you need to create a plan to save enough money to purchase the item.
Just don’t create more debt to get an item that is not a necessity.
3. Cost Factor
One of the best things to do when you are interested in purchasing a large item is to shop around for the lowest price.
After you have found the item you want for the lowest price then determine when you would like to make the purchase.
Can you go without the item for 2, 4, or 6 months? If so, determine how many pay periods you have before you hit the specific timeframe.
Next, take your number of pay periods and divide it by the cost of the item. This will help you decide how much money you should save each pay period.
I’ll give you a real-life example of how this works. My daughter was turning 16 and we knew we wanted to purchase her a car.
We were so excited to get her a car because we wouldn’t have to be her personal taxi anymore. We wanted to purchase a good used car that could last her through high school and college.
We settled on spending no more than $5,000 for a decent car that could be purchased with cash. She would be turning 16 in 1 year. We divided the $5,000 by 12 months.
This helped us determine how much we needed to save each pay period in order to buy it with cash.
4. Get Creative and Sell Your Things
I know you have heard of Ebay, Offerup, Facebook Market place, Poshmark, and Craiglist right? All these places are great for selling used items.
If you need extra cash don’t be afraid to get started selling your unwanted items.
Take a weekend to go through your closets, your kid’s closets, and your garage to find items you no longer use or want. People will literally buy things you never thought about selling.
The process is pretty simple. Just snap a photo of the item you would like to sell, do research to determine how you should price it, and then list it on one of the above websites.
If selling online is not your cup of tea, try to sell you’re items at yard sale.
I have found that the best days to do a yard sale is on Thursday or Friday. You might ask why?
Well think about it, everyone sells on Saturday. The best days to get people exclusive to your yard sale is during the week when there is no Saturday competition.
Any money you collect from selling your items online or through a yard sale can help you achieve your goal of purchasing your high-ticket item.
5. Budget Review
One way to find extra money is to review your budget and determine if you can make any changes. Can you sacrifice your family entertainment needs for three months to allow for the purchase of your large-ticket item?
I’ll be honest, finding some wiggle room in your budget can be challenging but doable. One area that has helped us tremendously was reviewing our utilities to determine where we could cut costs.
I did my research and found ways to cut back on our electric and gas bill. This past winter was the best winter we have had regarding the monthly amount we had to pay for our gas company.
We were able to save approximately $120.00 on our gas bill. This truly was a game changer for our budget.
Take a look at your budget and start calling some places to determine how you can cut some of your monthly costs.
Start with your utilities, insurance, and monthly spending on food. Making small changes in those three areas can yield you some extra cash every month.
6. Saying “NO”
With any goal you set for yourself you will be faced with obstacles. You will set strategic goals only to find out that something in life has caused you to take an unexpected detour.
Well, this one is pretty personal to me. It never fails when we are on a good saving streak here comes everything all at once.
We have been inundated with monthly holidays, birthdays, wedding showers, and baby showers lately. All of these special occasions has caused us to limit how much we have been able to save.
Let me be honest, we have had to make some tough decisions lately. We have had to say no to our loved ones because we were saving for a big purchase.
You have to stick to your plan and no one understands this better than you.
If saying yes postpone your goals, you have to decide if it’s worth waiting longer. Most people are understanding when you explain you have monthly money goals set for your household.
Have you ever saved for a big purchase? If so, I would love to hear how you were able to accomplish it without getting into more debt. Leave me a comment below.