The Vault November 2010: The Big Buy
If you’re buying a pack of gum, you probably don’t need to put a whole lot of thought into it. But if you’re buying a car, a computer, or anything else big, planning and preparation make a difference.
Worst Deal Ever
In France in 1965, a lawyer named André-François Raffray offered Ms. Jeanne Calment, then 90 years old, a deal: he would pay her $500 a month if he could have her apartment when she passed away. Unfortunately for him, she lived to age 122—the oldest human ever, outliving him by two years.
Step 1: Make a plan
Decide how much you can afford to spend on this purchase. Is it an investment in your education or your business that could provide a return down the road? Is it something you really need to get by, such as transportation? Or do you just want it really bad? Knowing why you’re making the Big Buy can help you figure out what it’s worth—and that can keep you from getting sucked into a slick sales pitch down the road.
Step 2: Smarten up
Learn all you can about the item. Do research online. Talk to people who have purchased the same thing. Go to the library and look through old issues of Consumer Reports. With all the information that’s out there, there’s no excuse to pay too much or get less than what you really want.
Step 3: Get the dough
For a big purchase such as a car or a computer, you might want to get a loan. Again, shop around to get the best rate. Same goes for insurance—you can save a lot by comparing different offers. If you’re not financing the purchase (and avoiding debt is usually smart), save up. Set up an automatic withdrawal to an interest-bearing checking account at your bank or credit union.
Step 4: Get the deal
For a lot of larger items, such as cars and computers, only fools pay full retail. Always ask if you can get a better deal and make sure to shop around. Make sure you know what warranty they offer—but be wary of paying for an extended warranty, as it’s rarely worth it. Finally, make sure you know their return policy. Items like apparel are often returnable; electronics and cars are often not.
Step 5: Think again
Before you take the plunge, make sure you’re making a smart buy with a few simple questions: Do you need it? Can you afford it? Are you getting the best deal? There’s nothing worse than making payments every month for something you don’t want any more.
Posted in Biz Kid$ News