Big Ticket Items

[Bluffmaster25]

Hey guys, I wanted to ask you all about the big ticket items that one buys. Things like houses, cars, laptops etc are things that I consider to be pretty expensive. These days I have been fortunate to make decent $ but have been pretty free spending, enjoying life, taking out women etc. But I have noticed that I keep wondering "where did it all go?" I have been on top of my bills and gradually paid down the CC debt, so I don't think I am irresponsible. I guess I have arrived at the point where I would like to buy a car -> laptop -> house yes, in that order :p

So I wanted your opinion/advice/experiences on this matter. I know that these items usually entail a hefty downpayment and also cost $$ to maintain (well, perhaps not the laptop). So I wanted to know how you guys went about purchasing them? Was there any fear of "making the wrong move" or a fear of a disaster? Obviously I am thinking of the worst case scenarios.

Up till this point, my most expensive purchase has been a laptop ($1K), so there is a certain fear of the unknown. On the other hand, I know that once I have brought the car, house, I'll be more focused on maintaining them and would not be pissing the money away and wondering what happened.

[inmediasres]

I won't address housing here because I am not really at that stage yet and haven't looked into it much.

As for a car, I would always buy a sturdy, reliable used make and model over a new Kia or Hyundai. I think it's worth it to spend a little more for the model that's 5 or 7 years old rather than buying something 10 years old and more liable to crap out on you. A car loses over half its value in the first two years, so avoid buying anything too new.

When buying a laptop, I look for a long warranty (3 years) and solid hardware. I also want good processing speed (1.83 GHz or better) and plenty of memory (1 GB minimum), plus a decent hard drive (60 GB minimum, 80 GB if you have a lot of music or video). I like Lenovo products a lot.

Sounds like you need to go out a little less and save a bit more (and that includes saving for your retirement...you won't be young forever!).

[winneythepooh7]

I am getting married this year, and we want to buy a house by next year, so I have decided to become extremely anal about my finances. I have found the key is to make out a monthly budget a couple weeks before the end of the next month (paying your bills online helps because you can see how much you owe). I also have learned that I have to pay myself first, even if it's not a whole lot. I have $50.00 from each paycheck automatically deposited into my ING high-interest savings account. I also have started an IRA where I have $25.00 a month automatically deposited. At the end of the month, when I do have some money leftover, instead of blowing it on something I don't necessarily need, I transfer it over into my savings account.

I have also divided my credit card debt and car loan by 12 to see how much I should realistically be paying to have everything paid off in a year. My goal is to pay my car off completely by the beginning of the summer. I am going to use my tax refund towards that. I also have figured out when I am getting "extra paychecks" and using these towards the car loan. What this means, is that most people are paid bi-weekly, but plan their monthly budget on being paid twice a month. However, when you are paid bi-weekly, that works out to be 26 paychecks a year and not 24. Find out when you are getting those two "extra paychecks" and put it either towards savings or a debt.

I don't think it's necessarily bad to purchase higher-ticket items through a loan or credit card, but you should set up a realistic plan to pay it off quickly. This was my mistake in the past, where I was only paying the minimum payment. Also, buy things you only need. I would love to buy a new "fashionable" SUV, however, realistically, we don't need it, or the car payments. So after I pay off my car, I am going to just make-do with that. I don't drive it that much anyways ;).

[spiritedaway]

Well, I'll tell you that I am very financially conscious, and I get super uncomfortable about BIG-ticket items (i.e. is it worth it? do I NEED it?) I"ll debate that endlessly in my head and think about where it would put me financially (am I going to be stuck in debt for a long time? do I have it in my budget? how does it affect me if I lose my job?). I have had some experience with the big-ticket items you listed, but I'll say a lot of it has to do with a lot of research.

I'll say that I usually spend hours comparing product specs for expensive items that I hope I never have to replace (i.e. GPS system, laptop). And I mean hours, and then I'll sleep on it. Research, research, research. I want to make sure I am getting the best product for my buck. I also check with people I know if they have recommendations for things I am looking for. Was I a little fearful about "is it the right choice"? Yes!! With enough research, it usually becomes pretty clear what I want. If there's hesitation on my part, I'd probably wouldn't buy it.

For my laptop, I have no hesitation (since it's my area of study) and I know what I need it for (mostly for the internet). So I went to bestbuy.com and bought myself a neat little laptop for $699 including shipping and handling. It's expensive enough that I looked for a decent one, but the price is not so far out (compared to those in the 1K and up) that I am going to freak out if it dies. I take care of it and it's still working fine almost two years later.

For the car, there are a couple of things I knew I wanted: I wanted a new, reliable car that would last me for at least the next 7-10 years. We called around and I found a Honda in a color that I love within a very specific price range where I feel like I could handle the monthly payment. (It was actually a 100% loan). It was the best thing I've purchased so far and it's almost 3 years old! And it's well maintained. I love seeing it everyday. :D It was well worth the price (and the payments).

I haven't bought a house yet, but I plan to buy when I find the right place (I live at home to try to save for downpayment). No rush on this one, since I figured that the home is the biggest investment of my life. I want to make sure I love it (not half-hearted about it) before I make a decision on a loan that will tie me down for the next 30 years. This one is hard because there are so many things you have to look at (from price to location to amenities). I've been actively looking around just to see what I like and don't like, and I recently put in a reservation on a unit I like. Whether that goes through will depend largely on the final price....

Am I a little fearful about it? Yes. Totally!!!! But at the same time, it's what I want and I am not going to lose the opportunity if it presents itself.

It's not nearly as bad if you see it that way, right? :p I think aside from research, a large part of it is figuring out what you want and what works for you. (It took me a while to get there...)

Good luck.

[yankeeyosh]

I am just terrified of buying big ticket items. I don't go on vacation because I'm afraid of spending $1,500 in one fell swoop. I know everybody does it around these parts...they just charge it and worry about it later, but I panic when my credit card debt gets above $500. I am simply amazed I actually didn't panic when I charged this past week's trip to N. Y. on my credit card...that was probably the first time I didn't do that. Same goes with computers, TV's (I need my 1994-era TV replaced, but I'm afraid to spend $300 on a new one), cars, etc. Don't get me started on houses, since it will only run me into trouble. Hell, I panicked for hours the other week over losing a $15 ink cartridge on the 'T' that I bought. But I worry about money constantly...yet I keep spending it at a measured pace, and really, at the end of the day, I don't have anything saved.

[vxmike]

I bought my car for $3,200 used a few years ago. No car payment = priceless! I've already gotten four good years from this vehicle and should get several more.

I camped outside Best Buy on Thanksgiving for 16 hours to get a $750 laptop for $379. It should be solid for five years.

Don't own a house and presently have no desire to.

I don't generally like buying expensive items, but some are obviously necessary like a car, computer, etc. I research products and deals extensively and buy the best value. I never finance anything - if I can't pay cash then I can't afford it. My largest purchase in the last few years was actually an $800 rifle.

[Bocheezu]

Houses -- Probably the scariest thing to buy, but really, unless you make some way out there mistake (like don't get it inspected beforehand and it has some huge problem you didn't realize), there's nothing you can't fix about a house. Generally just figure out how much updating to the house you're willing to tolerate and go from there. I wanted a house that didn't need any fixing up, so I paid extra for one.

Cars -- I work for Ford so cars really aren't too much an issue. I already know what brand I'm getting, so it's just a matter of buying at the right time when they have incentives (I buy when they have 0% financing or something).

Computers -- I've never bought a laptop because I don't need them for anything. I build desktops from scratch for cheap. Really easy to do and saves a ton of money. Still running the same computer I built 3 years ago and basically all it'd need in the next year is maybe some more RAM. I really like the ability to just update the areas I need to instead of having to buy a whole new rig all the time.

[wordsmith]

I'm not terrified of big ticket items, but at this point in life, I don't need any of them. My credo has been to spend as little as possible on pretty much everything, from trans to housing to technology. No matter what.

[Bluffmaster25]

Great responses guys!

I guess what motivated me to start this thread was to see how other people handle these purchases. I had thought that I was the only one terrified at the thought of buying something that had the potential to cause more problems for me down the road..but I am not the only one (so reassuring).

As for the lifestyle..its true that I wanted to enjoy the 3 years of post college life and I have, but some things have changed. I did some analysis on my spending patterns and realized that I can buy a few big ticket items and still be able to eat and enjoy myself.

So after much thought and advice, I have decided:

Car: I am going to put 50% on a sturdy used 3-4 year model. I have this no interest financing in place with a particular used car dealer. My friend is a mechanic who will check out the specs. Car insurance will be under my dads name and I will be an authorized driver, save some $.

Laptop: I am going to go with a Sony Vaio. They have this laptop trade in program where you can give your old laptop for a credit. My present laptop will give me a $279 credit on this future purchase. Signed up for the Sony Credit Card which gives another $100 in rebate. Total savings: $379 and not including any tax writeoffs as I will be using it for work (will discuss with accountant)

House: This one I am a bit shaky on. I am most definately getting roommates to help with the mortgage. The rest of the details are still being worked out.

I have done a bit of reading on personal finance and really enjoying the process. I just signed up for an IRA which will take out $400 in pretax income per month. My firm has a separate pension plan for me where they have already kicked in a few grand (to my surprise).

I found out that I will be getting $1K back in a tax refund and in March I will be getting three paychecks. So I am planning on pumping a few grand in the stock market. Will give $500 to a charity/someone who needs help. Feeling great about the finances! :)

[cheshrcarol]

Car: I am going to put 50% on a sturdy used 3-4 year model. I have this no interest financing in place with a particular used car dealer. My friend is a mechanic who will check out the specs. Car insurance will be under my dads name and I will be an authorized driver, save some $.If you're going to get 0% financing you'd be better off not putting any money down.

[EmberMae]

Well, I'll tell you that I am very financially conscious, and I get super uncomfortable about BIG-ticket items (i.e. is it worth it? do I NEED it?) I"ll debate that endlessly in my head and think about where it would put me financially (am I going to be stuck in debt for a long time? do I have it in my budget? how does it affect me if I lose my job?). I have had some experience with the big-ticket items you listed, but I'll say a lot of it has to do with a lot of research.

I'll say that I usually spend hours comparing product specs for expensive items that I hope I never have to replace (i.e. GPS system, laptop). And I mean hours, and then I'll sleep on it. Research, research, research. I want to make sure I am getting the best product for my buck. I also check with people I know if they have recommendations for things I am looking for. Was I a little fearful about "is it the right choice"? Yes!! With enough research, it usually becomes pretty clear what I want. If there's hesitation on my part, I'd probably wouldn't buy it.

I'm the same way. I feel more secure when I've done lots of research. With my current car, I did a ton of research and I feel like I got a good car, for a good price. But at the time it was incredibly scary. The salespeople couldn't understand why I wasn't excited about getting a shiny new car; in reality I was panicked about getting in to debt and spending my life savings. But reflecting upon it now I'm really happy about the deal I got.

I actually feel good about big ticket items because by the time I actually buy them I feel like I have put enough time and effort into making the decision. In some cases, this takes years. What annoys me are these expenses that are huge and come out of no where, such as medical bills, car accidents, etc.

[Bluffmaster25]

If you're going to get 0% financing you'd be better off not putting any money down.

0% Financing is contingent on a 50% downpayment of the purchase price.

[beeblebrox]

My biggest ticket item lately has been furniture. I needed a new dresser because my other one fell apart. I bought a dresser and a longer dresser (can't remember the name) for about $1000. Beyond that, my other purchases have been yarn for my knitting hobby. Since I started that, I don't have a desire to spend like I used to on clothes and such.

I still save $500 a month. I upped it to $536 with my raise and switching a dental plan. All of the savings goes into my Citibank e-Savings account.

[wordsmith]

I've managed to keep my furnishing costs down by using mostly heirloom furniture (have a great desk that was my grandmother's), and getting some really nice stuff for steals at auctions. It's higher quality than what's in my price range in furniture stores (and definitely higher quality than cheapy assembly-required stuff), yet can be had for next to nothing.

[beeblebrox]

I've managed to keep my furnishing costs down by using mostly heirloom furniture (have a great desk that was my grandmother's), and getting some really nice stuff for steals at auctions. It's higher quality than what's in my price range in furniture stores (and definitely higher quality than cheapy assembly-required stuff), yet can be had for next to nothing.

Majority of my furniture has been given to me or cheaply bought. My dressers were bought at a furniture store and we inspected the quality which was obvious compared to its other contenders. Also, it was at a clearance section of the store too. I would like to buy some Ethan Allen one day, but in no rush because apartments are small in Chicago and I'm combining furniture with my bf in May.

[Trillian42]

I think something you should do before you purchase a big ticket item is make sure your credit score is as it should be. Go online and get a free credit report and make sure the information is acurate. Interest rates for financing are based a lot on your score.

[Ciderhillnh]

Ive bought several BIG ticket items:

Digital camera ($400)
Car ($18,000 after my trade in for $6,000)
House ($495,000)

Im not scared of big ticket items. I do massive amounts of research before I purchase anything to see if there are defects I should know about or what is best for what I might use it for. I also ask my friends what they use, and also my electronics friends for those types of purchases.

I got my digital camera with NO interst by signing up for a credit card through the company. I paid over the minimum payment each month and paid it off in the year alotted. Best toy I ever bought. And I got the largest memory the camera could fit and I can hold close to 1000 pics so no need to erase.

As for the car, I knew my price range and what I wanted for features. I knew what I would give up and what I wouldn’t and thus would hold out for. I also knew the kelly blue book value of my car when walking in so when they tried to take my trade in for less I wouldn’t budge and they gave me what I deserved for it.

As for the house, I went in with my parents and while it didn’t turn out the best (due to roommates and poor ideas about rent etc) it was a great learning experience.
I knew our price range and what we were looking for, and we got it (2 weeks of looking and this was when the market was hot)

Mostly its do your research, know what you want and what you can live without and go from there. Know your price range and what you absolutely CANT pay as well as what is easily affordable.
Most of all make sure you have a financial cushion before you make any large purchases, and that the cost will fit into your budget so that other bills don’t suffer.

My advice comes from my own personal experience, the advice of my financial advisor etc.
Ive never been broke, to me I get nervous if there is less than $1,000 in my checking. Ive never overdrawn my account or paid bills late.

Good luck!

[Ciderhillnh]

I just saw that you wanted roommates to help with a mortgage.....all I can tell you from seeing my friends mistakes....DONT BUY UNLESS YOU CAN COVER THE MORTGAGE AND BILLS ON YOUR OWN 100%.

If you are going to rely on roommates to help cover you could get screwed.

[Ciderhillnh]

I also just saw the furniture piece (Id edit my posts but I cant see them when I look at the thread.

Anyway, I bought a dining set for $1000, I have carpet in my room that was $750.

I paid those off over time as well (did the same as I did with my digital camera, got store credit card paid it off before alotted time to have no interest. I needed them and made sure to get quality that would last me years. So now I have beautiful furniture and its all paid off.

[mishl982]

I just saw that you wanted roommates to help with a mortgage.....all I can tell you from seeing my friends mistakes....DONT BUY UNLESS YOU CAN COVER THE MORTGAGE AND BILLS ON YOUR OWN 100%.

If you are going to rely on roommates to help cover you could get screwed.
I agree with this. It's good to consider roommates to cut down on the monthly mortgage payments, but you have to be prepared to cover the costs on your own, just in case.

[weary]

i'm sorry if i repeat anything, but i did not read the thread, just the OP.

as far as the kind of big ticket items you listed, i am on my 3rd car, 2nd computer, and 1st home. i hate owing $, even on a home which ususally considered "good debt", so i tend to be more cautious about these purchases...though i wasn't always that way. i went through some VERY HARD lessons about $$ and am glad to know better now.

my advice to you is to first and foremost get a handle on your spending and develop a budget and savings plan - and STICK TO IT. don't beat yourself up if you go over or under occasionally w/ small amounts, but keep the large purchases to necessary items only. the old saying about "pay yourself first" is absolutely true. DO IT.

second, always, ALWAYS have an EF (emergency fund). if you are you think you are ready to buy a house b/c you have enough saved for the down payment, you are WRONG. you need to have the down payment saved, ++++. a good rule of thumb (although i would aim higher) is to always have 1-2% of your home's value saved @ all times for emergencies and/or home maintenance. so, if you buy a house that is appraised @ $400,000, you should keep $4,000-$8,000 in the bank for repairs and annual maintenance/upkeep. this is not the same as an EF you should have just for life's little surprises, which you should also have.

i could go on, but i'm sure i've said enough that most won't agree w/, and this post is also getting long...so i'm stopping here.

good luck, whatever you decide to do/buy.

[analogman]

Car: I am going to put 50% on a sturdy used 3-4 year model. I have this no interest financing in place with a particular used car dealer. My friend is a mechanic who will check out the specs. Car insurance will be under my dads name and I will be an authorized driver, save some $.


Make sure you are getting a decent deal on the car too. Unless the used car dealer is a friend and cutting you a deal, I suspect the price of the car might be inflated to give you 0% financing. The dealer is in business to make a profit after all.

[nixmahn]

free spending, enjoying life, taking out women etc.

STOP SPENDING MONEY ON WOMEN. If you have to bribe them to go out with you, they are just not interested. If you have to, use hookers. Its probably cheaper in the long run and the hookers need it more than the girls you are taking out anyways;):

Other than that, only buy what you can afford within the next pay check or credit card bill payment. Pay down the credit card bills to pump up your credit score, so you can get a low rate when you have to take out a loan for the big stuff

[Bluffmaster25]

I just saw that you wanted roommates to help with a mortgage.....all I can tell you from seeing my friends mistakes....DONT BUY UNLESS YOU CAN COVER THE MORTGAGE AND BILLS ON YOUR OWN 100%.

If you are going to rely on roommates to help cover you could get screwed.

Right. That is a good point. Although I have not done an intensive financial analysis, but my budget will significantly tighten up if I don't get roomies. So it would probably mean less discretionary income for things like eating out at restaurants, vacations etc. I would be buying a home in the Northeast, where home prices are higher relative to the other regions of the US.

I think you're right on target though.

[Bluffmaster25]

i'm sorry if i repeat anything, but i did not read the thread, just the OP.

as far as the kind of big ticket items you listed, i am on my 3rd car, 2nd computer, and 1st home. i hate owing $, even on a home which ususally considered "good debt", so i tend to be more cautious about these purchases...though i wasn't always that way. i went through some VERY HARD lessons about $$ and am glad to know better now.

my advice to you is to first and foremost get a handle on your spending and develop a budget and savings plan - and STICK TO IT. don't beat yourself up if you go over or under occasionally w/ small amounts, but keep the large purchases to necessary items only. the old saying about "pay yourself first" is absolutely true. DO IT.

second, always, ALWAYS have an EF (emergency fund). if you are you think you are ready to buy a house b/c you have enough saved for the down payment, you are WRONG. you need to have the down payment saved, ++++. a good rule of thumb (although i would aim higher) is to always have 1-2% of your home's value saved @ all times for emergencies and/or home maintenance. so, if you buy a house that is appraised @ $400,000, you should keep $4,000-$8,000 in the bank for repairs and annual maintenance/upkeep. this is not the same as an EF you should have just for life's little surprises, which you should also have.

i could go on, but i'm sure i've said enough that most won't agree w/, and this post is also getting long...so i'm stopping here.

good luck, whatever you decide to do/buy.


Thanks for the advice. It looks like I have some saving to do! So I already have a 1. Pension Plan that is firm sponsored. 2. An IRA setup recently. I need to have an emergency fund for the house. I read that its a good idea to have an EF for about 6 months of expenses in case you lose your job or cant work, so I will be shoring that up as well.

The good thing about saving is that I am setting these separate funds up in separate accounts. So my paycheck automatically deposit these budgeted items. I guess I will have to get used seeing my main (expenses) account being low on $$s. Its better to be broke this way :p

[Bluffmaster25]

Make sure you are getting a decent deal on the car too. Unless the used car dealer is a friend and cutting you a deal, I suspect the price of the car might be inflated to give you 0% financing. The dealer is in business to make a profit after all.

Excellent point! I have looked up the blue book value and will be negotiating to get a 5-10% discount on them. Since the cars that I am interested in are not the hottest models, I think this plan is reasonable. Besides I feel like I have plenty of leverage because that 50% down would be significant $.

On the other hand, I am also on the lookout for those zero or 1-2% financing deals offered by auto manufacturers. The only thing I don't like is the depreciation rates for cars..I mean losing 5-10% of the value driving a new car off the lot is just not for me.

[Bluffmaster25]

STOP SPENDING MONEY ON WOMEN. If you have to bribe them to go out with you, they are just not interested. If you have to, use hookers. Its probably cheaper in the long run and the hookers need it more than the girls you are taking out anyways;):

Other than that, only buy what you can afford within the next pay check or credit card bill payment. Pay down the credit card bills to pump up your credit score, so you can get a low rate when you have to take out a loan for the big stuff

I hope I am not flooding this thread, but you guys have been top notch with the advice.

Just to give you an insight, my college days were spent being pretty poor. Despite working part time, I just didn't have the cash to burn on having fun. My parents helped me with the tuition expenses but covering misc costs including books took a huge chunk out of my paychecks (also I did'nt make much money back then). So I had felt like I just went to class and worked during college.

After graduating, I ended up progressing to a position with a decent pay. So I decided that it would be great to just splurge for a year or two. I know that I went overboard with this lifestyle. In retrospect, I agree with what you said: I treated those women VERY well and don't have much to show for it. Maybe its my standards or those woman were jacked up in one way or the other, I did not end up in a long term relationship with them. Great experiences, nothing to "show" for it.

Haha I am not about to go out and grab hookers either :D My state of mind is really moving towards financial stability and big ticket priorities, so women in general are no longer a big deal. Its about taking a step back from all of that and hunkering down to improve my financial outlook.

Who knew that I would turn into a financial conservative in '07?

[mishl982]

Who knew that I would turn into a financial conservative in '07?
If it makes you feel any better, I've already dubbed this year Poor '07 for me. I'm actually being conscious about saving money for once (okay so it started last year) as well as finding part time gigs for extra income.