Purchasing big-ticket items: can you afford them?

Tired of renting and looking to buy? Or maybe it’s time to trade in your clunker for your dream car or your outdated cell phone for one that does more than just make phone calls. Before you commit to any large expense, it’s important that you examine your budget closely and weigh the pro’s and con’s before determining whether or not you can afford that next big purchase.

Buying your dream home:

Buying your first home can be an exhilarating experience, especially if you’ll be upgrading from a tiny, one-bedroom apartment into your own home, equipped with a garage and a large yard for your pooch. Still, you should take some time to make sure you’ll not only be able to afford buying the home, but maintaining it as well.

The purchase price of a home is only the beginning of a long list of fees you’ll be responsible for once your offer for a home is approved. After the seller agrees to your offer, you’ll need to make out a check to the title company known as “option money.” In most cases the check will be for approximately $500 and it is asked of you in order to show that you’re serious about purchasing the home. When it comes time to close on your home this money will be added towards your down payment. In addition, you should be prepared to fork over some cash for your down payment, closing costs, appraisal, as well as a home warranty and home inspection.

Keep in mind that when owning a home you’ll not only be responsible for your mortgage payment every month, but for the taxes and upkeep of the home as well.

Time for a new car?

Perhaps you’ve been playing with the idea of upgrading your clunker for something that makes a little less noise and spews out a little less smoke.

First, it’s important to keep in mind that most of the low rates advertised by car dealerships are offered only to those with pristine credit scores, so it’s important to check your credit report and score to make sure you’ll qualify for the advertised rate. Once you’ve decided on the make and model of your choice, consider purchasing a certified pre-owned vehicle because driving your new car off the lot means the value of said new car will most likely plummet. Buying a car that’s just a few years old can save you thousands of dollars.

According to Suze Orman, you shouldn’t agree to a term over 36 months as vehicles tend to depreciate rather quickly, especially if your top pick in this current economic state is a full-size, gas-guzzling SUV.

Once you’ve made your purchase, you’ll need insurance for your new vehicle, which can be a costly expense. Make sure you shop around before settling on an insurance provider. Also, consider bundling your insurance if you already have an insurance policy for your home or other automobiles. Insurance companies typically offer a discount for doing so.

You’ll also want to remember that like a home, a vehicle requires proper upkeep. Performing regular maintenance on your car means you’ll get more for it once you decide to trade it in.

Electronics

Many electronics come with additional costs, for example, the iPad or Amazon Kindle may cost you more than you might think. After your initial purchase, you’ll have to fork over money for your favorite books, monthly magazine or newspaper subscriptions.

Purchasing a new cell phone can also come at a high cost. Beyond the initial price of the fancy phone you’ve been eyeing you’ll probably be required to purchase the pricey data plan that comes along with it. Make certain that you know exactly how much your plan will cost each month before you make the fancy upgrade

When buying big-ticket items, you’ll want to examine your budget closely. Often times, the initial cost of an item isn’t all you’ll be responsible for. Do some number crunching before buying and make sure that you have all the relevant facts, enabling you to make an informed, thoughtful decision.