Do you manage your debt or manage your money?

Is the next large purchase based upon monthly payment and how it fits into your monthly budget? Certainly not a bad way of doing things, but if this is the ONLY thing in consideration then I have a few suggestions:

1. What is the interest rate and total cost of interest over the life of the loan?
2. What is the term of the loan? How long will it take to pay it off?
3. What fees are added to the transaction?
4. Is this a lease or purchase?
If the decision to buy something is only about the monthly payment fitting into your budget, you may be paying for it longer than you will enjoy your purchase. Realize most things depreciate much faster than the loan balance decreases. This kind of decision-making usually tends to be more emotional than financial. When a decision is made leaning to the emotional side then it runs a higher risk of causing other emotions later on. In other words, excitement today about the new purchase may lead to frustration and contention about your new purchase being worth less than what you owe later. Maybe an unforeseen employment change comes along and the payment on this purchase makes finances tough to pay each month.
I’m not saying we shouldn’t enjoy life, I’m a huge advocate of enjoying each day! I just have also seen and experienced the frustration and even misery of a decision now… hurting later.

We’re here to help. Let us know.


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