I suspect I am a bit of an odd duck. My approach with nearly every purchase and most certainly the big purchases (houses, cars, boats, etc…) is to decide what I need, what I want, and what I can afford. I then research to see how all of this comes together. Yes, this research always takes time but I would rather invest the time now rather than wasted money or broken hopes/dreams later.
I think we (US citizens, at least) have lost the ability to differentiate between needs and wants. I realize that television is not reality but you can hear many interesting things there. I was watching people house hunting on HGTV and listened to some of the craziest things – the two of us need 5000 sq. ft., need four bathrooms, need a pool, need a six burner stove, etc… Really?? It may be bad information or “newbiness” but the same types of things can be herd in nearly all circles.
I am not sure if it will help anyone else but maybe…
- Stop emotional buying. Do not allow yourself to be talked into buying something because it is cool, the latest “thing”, or because the salesman is filling you full of false information.
- List your needs. Be honest. Much of what we think is a need is not.
- List your wants. Be honest.
- Spend a little time researching the options. With the Internet, this is very easy. If possible, identity the cost of the want items. Seeing these costs broken out sometimes help you to see that you really don’t want something THAT much.
- Set your budget BEFORE you start shopping.
- Stick to your budget.
A final thought; I try to avoid looking at that which is not possible. Yes, it may be fun to look at the million dollar home, the 100′ yacht, the $500k super car, etc… but all it seems to accomplish is further blurring the line between need/want and makes us unsatisfied with the options that are within our budget.
I know, none of this is particularly fun but the goal is to put yourself in a better financial situation for whatever you really desire (retirement, less stress, fewer work hours, etc…).