4 Questions You Need to Ask Yourself Before Every Major Purchase
A car. The wedding of your dreams. Your first house. These could be three of the most wonderful purchases of your life — or three of the worst. After all, the words "regret car purchase" generate 7.5 million Google search results, your wedding day will very likely be the most expensive day of your life, and 1 in 4 homeowners have buyer's remorse. Better do it right. (See also: The 7 Dumbest Purchases People Make)
But how does one keep far from catastrophe when making purchasing decisions about items that cost five figures or more? Purchases of this magnitude aren't run-of-the-mill for most of us. Well, lucky for you we've compiled a tidy list of questions to ask yourself before pulling the trigger on any major purchase.
1. Will I View This as a Good Purchase a Year From Now? Five Years From Now?
Buyer's remorse is a sneaky thing. At first, you're over-the-moon for your new Jeep. But will you still be pleased with your purchase once the newness wears off? Even our most prized possessions have a way of becoming just another thing in the pile of stuff that occupies so much of the space in our lives. We begin to compare it to other things like it that we don't yet have. Like a petite, red sports car. Or a Harley Davidson. And just like that our Jeep loses its luster.
Besides, research shows it's the experience of wanting a luxury item and shopping around for it — not the purchase itself — that makes us happy. So, go ahead and research the heck out of that new Jeep. You can even take it for a test drive. Just don't buy the thing unless it passes our four-question vetting process.
2. How Secure Are My Finances?
How plausible is it that your income could drop off dramatically two years from now? Would you be left to drown in payments you can no longer afford? Imagine your worst-case financial scenario, and draft a plan for how you'd escape things like bankruptcy and foreclosure. Are you completely dependent on your income to cover your expenses and financial obligation, or do you have a sizable savings?
If you don't seriously consider your financial forecast, even things widely considered as great investments can become regrettable. Exhibit A: A third of millennials say they would have been better off working than going to college. The reason? They're drowning in debt. More than half the 1,414 college grads surveyed by Wells Fargo said they afforded their education by taking out hefty student loans that has become the crux of their financial distress.
3. Am I Suffering From Stress, Duress, or Lack of Sleep?
Studies show that we're more likely to make big, splurgy purchases we'll later regret when we're mourning a death, dealing with a divorce, feeling depressed, experiencing stress at work, or otherwise emotional. That's because sadness often tricks us into thinking we can better ourselves and therefore our emotional state by making extravagant purchases. So steer clear of making any drastic financial decisions when experiencing any period of personal turmoil.
4. Am I Buying Because It's a Good Deal?
Make sure it's a good deal for you — your personal wants, needs, values, and financial standing — and not just "a good deal," period. The boat may very well be "the deal of a lifetime," but make sure it's your lifetime that you're considering. In fact, it doesn't really matter how good the deal is anyway. If you weren't planning on buying a boat until the good deal came along, then you're running the risk of throwing your money away on a luxury item you simply don't need. Now that's a recipe sure to do nothing more than worsen your financial position.
What do you ask yourself before making a big purchase? Please share in comments!
Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.
Wise Bread is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.
We almost always talk ourselves out of a purchase. Can we wait a week and see if we feel the same way next week instead of in the moment? Can we find a better deal somewhere else?
I buy media advertising and never take the first offer. I usually say "is that the best you can do?" I never say yes immediately, I always wait a week or two and don't have any contact and then the salesperson will end up dropping the price because it is more important to make a sale than to not have a sale.
We just did the same thing on buying a piano. My wife and I went in with a strategy. I told my wife she needs to find and just totally love a piano and I would play the grumpy husband that says it is too expensive and wants to walk away. We did this on our last car about 6 years ago (it's kind of fun). She found what she wanted and the deal was actually pretty good and she sat down and played it and said she wanted it and I said it was too expensive and started walking off to something else that was cheaper. My wife came over and we were having a private discussion and I kept shaking my head and my wife started nodding like she was agreeing with me. The salesperson panicked and said, "what if I can knock off another $300?" That was more than I expected it to drop, but I didn't want to smile or get too excited. I pulled out my phone and said I needed to do some math first, but I just checked my twitter feed. I rubbed my hands through my hair and had an agonized look on my face. I said, "I don't know." The sales person said, "I'll be right back." He came back and said, "My boss said I can go down $500." And.....deal! Again it is more important to make a sale than to not. The prices are always high to have room to negotiate. So take your time and keep your money!
Right on the money! I would also definitely look at how you are paying for this purchase. If you plan to use credit to finance all, or part of it, is THAT really the best choice?