Everyday Cheapskate: How To Afford Big-Ticket Items
Finally, you have a couple of months where things are going well. The bills get paid on time, and you actually have money left at the end of the month. Then, pow! Without warning, the water heater bursts, the car breaks down, and the first half of the property tax bill is past due -- and suddenly you're broke.
How can you possibly plan or budget for life's big-ticket items? Many people believe it just can't be done, and they have no choice but to rely on their credit cards to cover the cost of emergencies -- whether it's something they should have known was coming or not.
There is a way out: Anticipate these expenses. You know they're coming, so cut the price tag on that big-ticket item into small pieces, and make it as routine as paying the phone bill.
DEFINE THE GOAL
The first and most important step is to figure out what your next big money decision will be. You may not be aware you have any, but the truth is you have several to choose from. Do you think a big dental bill is coming your way? Is your car starting to show its age?
Let's say, for example, your refrigerator is slowing down. At 7 years old, you'll be lucky to get three more years out of it. Knowing this gives you something valuable: time. Time to start researching and saving.
What style and size do you need? About how much will it cost? Are there options you should consider? Brands you should avoid? Look into it now.
IDENTIFY THE TERMS
If you start saving for the refrigerator right now, you'll have about 36 months. Let's say you determine that it'll cost about $1,800. Divide that amount by the term of 36 months. The result is about $44. You'll need to save $44 each month starting now so you'll be able to replace your refrigerator in three years.
MAKE IT SMALLER