Major Purchases

Be Smart

Just because you have to spend a lot of money on something doesn't mean you have to risk your financial future in the process. It is possible to spend a lot and still be smart about it.

What do you consider to be a major purchase: a new car, truck or motorcycle, a home, a new gaming system? In truth, any of these could be a major purchase depending on your financial situation at the time you make it.

But they might also be no big deal if you have your financial house in order. In short, everything depends on how the purchase compares with the rest of your financial life.

Major Purchases
Major Purchases
Primary Text Separator for Milspouse Money Mission, Financial Education for Military Spouses
Primary Text Separator for Milspouse Money Mission, Financial Education for Military Spouses

Major Purchases

Be Smart

Just because you have to spend a lot of money on something doesn't mean you have to risk your financial future in the process. It is possible to spend a lot and still be smart about it.

What do you consider to be a major purchase: a new car, truck or motorcycle, a home, a new gaming system? In truth, any of these could be a major purchase depending on your financial situation at the time you make it.

But they might also be no big deal if you have your financial house in order. In short, everything depends on how the purchase compares with the rest of your financial life.

Primary Text Separator for Milspouse Money Mission, Financial Education for Military Spouses
Military Spouses - Financial Planning - Measure Progress

Major Purchases 301

Think First

 

There are several things you should keep in mind to stop major purchases from becoming major problems:

  • Logic beats emotion — Be smart. Don't let fancy marketing suck you in.
  • Additional costs matter — What else will you have to pay? As an example, cars require maintenance, repairs, gas and insurance. Other big purchases are often similar.
  • Things change — Your life can change a lot in a year or two. Think about a military move, new child, or deployment. Will today's purchase still make sense then? Or could you regret it?
  • Shopping around is smart — It forces you to slow down the purchase decision and be more levelheaded about what you are buying.
  • Cash or credit? — Paying cash is often smarter than financing. Just don't use up all of your cash. Keep some for emergencies.

Avoid Trouble

 

Follow these three steps before buying big things:

  • Ask yourself: Want or need? — Do you really need what you're about to buy, or do you just want it? Be honest. For example, you may legitimately need a car, but you probably don't need the nicest one available. Bottom line, if you're not as excited about making a smart purchase as you are about what you're buying, that could mean trouble.
  • Wait — One of the best ways to short-circuit an emotional buying decision is to implement a cooling-off period before you pull the trigger. Sleep on it — maybe for a couple of days — and see if it still seems like a good move.
  • Get a second opinion — Ask a parent, family member or a friend to be a sounding board on major purchases. Just be sure to find a helper and not an enabler.

Be Smart About Vehicle Purchases

 

As a military spouse, buying a vehicle isn't just a big family decision, it's one that could factor significantly into your financial planning and your monthly budget. It is important to assess your needs, identify your priorities and understand the available financing options before you make the decision on the most appropriate vehicle for you and your family.

ASSESS YOUR NEEDS:
Major Purchases - Purchasing a New Vehicle

  • It’s easy to rationalize that you need more in a vehicle than you really do. But resist the urge. Limit your total auto expenses to 15-20% of your gross pay. Be sure to include the cost of gas, insurance, maintenance and repairs.
  • Consider your personal situation. Will you be moving due to a PCS or will your spouse be deploying anytime soon? Will your household income be decreasing for any reason? A lot can change over a few years so it is important to think about your purchase not only in terms of whether you can afford the vehicle today, but also whether you’ll be able to afford it in the future. Most vehicles decline in value rather quickly, making it easy to owe more than the vehicle is worth.

IDENTIFY YOUR PRIORITIES

  • If you are buying a new vehicle, look for the lowest vehicle loan rates, the latest safety features and technology, the best warranty, and lowest maintenance costs.
  • If you are buying a used vehicle, consider the better buy, less depreciation, lower expenses on registration, licensing fees, and insurance premiums.

DECISION FACTORS

  • Vehicle price Rebates, discounts, option package, trade-ins, available financing.
  • Affordability — Monthly payments, fuel, insurance, maintenance, repairs, taxes, registration, license fees. It's not just the loan payment!
  • Resale value — Future marketability: automatic transmission, air conditioning, leather upholstery, anti-theft system, safety features, other accessories.
  • Gas mileage — EPA estimates, engine size, transmission, load capacity, road conditions, driving habits, advantages and disadvantages of hybrids.
  • Safety — Crash-worthiness, safety ratings, safety features.

UNDERSTAND THE LOAN TERMS

When deciding on a vehicle loan, it is easy to commit to a loan with a longer term when a low monthly payment looks advantageous.

Click on the image below to discover the implications.

 

Major Purchases - Vehicle Loan Debt Multiplier

Military Spouses - Financial Planning - Measure Progress

Major Purchases 301

Think First

 

There are several things you should keep in mind to stop major purchases from becoming major problems:

  • Logic beats emotion — Be smart. Don't let fancy marketing suck you in.
  • Additional costs matter — What else will you have to pay? As an example, cars require maintenance, repairs, gas and insurance. Other big purchases are often similar.
  • Things change — Your life can change a lot in a year or two. Think about a military move, new child, or deployment. Will today's purchase still make sense then? Or could you regret it?
  • Shopping around is smart — It forces you to slow down the purchase decision and be more levelheaded about what you are buying.
  • Cash or credit? — Paying cash is often smarter than financing. Just don't use up all of your cash. Keep some for emergencies.

Avoid Trouble

 

Follow these three steps before buying big things:

  • Ask yourself: Want or need? — Do you really need what you're about to buy, or do you just want it? Be honest. For example, you may legitimately need a car, but you probably don't need the nicest one available. Bottom line, if you're not as excited about making a smart purchase as you are about what you're buying, that could mean trouble.
  • Wait — One of the best ways to short-circuit an emotional buying decision is to implement a cooling-off period before you pull the trigger. Sleep on it — maybe for a couple of days — and see if it still seems like a good move.
  • Get a second opinion — Ask a parent, family member or a friend to be a sounding board on major purchases. Just be sure to find a helper and not an enabler.

Be Smart About Vehicle Purchases

 

As a military spouse, buying a vehicle isn't just a big family decision, it's one that could factor significantly into your financial planning and your monthly budget. It is important to assess your needs, identify your priorities and understand the available financing options before you make the decision on the most appropriate vehicle for you and your family.

ASSESS YOUR NEEDS:
Major Purchases - Purchasing a New Vehicle

  • It’s easy to rationalize that you need more in a vehicle than you really do. But resist the urge. Limit your total auto expenses to 15-20% of your gross pay. Be sure to include the cost of gas, insurance, maintenance and repairs.
  • Consider your personal situation. Will you be moving due to a PCS or will your spouse be deploying anytime soon? Will your household income be decreasing for any reason? A lot can change over a few years so it is important to think about your purchase not only in terms of whether you can afford the vehicle today, but also whether you’ll be able to afford it in the future. Most vehicles decline in value rather quickly, making it easy to owe more than the vehicle is worth.

IDENTIFY YOUR PRIORITIES

  • If you are buying a new vehicle, look for the lowest vehicle loan rates, the latest safety features and technology, the best warranty, and lowest maintenance costs.
  • If you are buying a used vehicle, consider the better buy, less depreciation, lower expenses on registration, licensing fees, and insurance premiums.

DECISION FACTORS

  • Vehicle price Rebates, discounts, option package, trade-ins, available financing.
  • Affordability — Monthly payments, fuel, insurance, maintenance, repairs, taxes, registration, license fees. It's not just the loan payment!
  • Resale value — Future marketability: automatic transmission, air conditioning, leather upholstery, anti-theft system, safety features, other accessories.
  • Gas mileage — EPA estimates, engine size, transmission, load capacity, road conditions, driving habits, advantages and disadvantages of hybrids.
  • Safety — Crash-worthiness, safety ratings, safety features.

UNDERSTAND THE LOAN TERMS

When deciding on a vehicle loan, it is easy to commit to a loan with a longer term when a low monthly payment looks advantageous.

Click on the image below to discover the implications.

 

Major Purchases - Vehicle Loan Debt Multiplier

Primary Text Separator for Milspouse Money Mission, Financial Education for Military Spouses

Recent Blogs

Reduce Strain on Your Family Spending Plan

October 13, 2020

Tips to Stretch Your Spending Plan This Fall You may have noticed the days are getting a little shorter, and there’s a crispness to the air. Fall is officially here! Under normal circumstances, military families often welcome the change in seasons, as they settle into school and extra-curricular activities. But this year is anything but…

Read More

What You Need to Know About the Payroll Tax Deferral

September 22, 2020

Payroll Tax Deferral Military spouses, have you heard? To help provide relief during the COVID-19 pandemic, the Presidential Memorandum issued on August 8, 2020 temporarily defers Social Security — Old Age, Survivors, and Disability Insurance (OASDI) — tax withholdings for some Service members. This is known as the payroll tax deferral. What Does This Mean…

Read More

5 Tips for Avoiding Employment Scams

July 8, 2020

Beware of Employment Scams While this year’s permanent change of station (PCS) season is off to a slow, uncertain start, it is beginning to take shape. These moves will transplant military families around the country and even the world. As a result, many military spouses may be looking for jobs in a challenging job market.…

Read More

How to Protect Your Personal Finances Now

April 20, 2020

The COVID-19 pandemic sweeping the country and world is having a dramatic impact on how we live our lives and function within our communities. Many of us are affected by school and work closures and possibly even stay-at-home orders. Military families may also face additional uncertainty with the Stop Movement order impacting future assignments and…

Read More

2019 Tax Prep: Back to Basics

March 23, 2020

It’s tax time again. And while the federal income tax filing deadline for 2019 has been extended to July 15, 2020, that date will be here before you know it. Whether you’re preparing your own taxes or seeking professional assistance, here’s some guidance on what documents you need and where to get additional support to…

Read More

Staying on Track with Your Financial Goals

February 4, 2020

You Can Do It! Stay on Track with Your Financial Goals Did you set any financial goals or resolutions for the new year? If so, the end of each month is the perfect time to see if you’re staying on track with your financial goals. Set SMART goals Hopefully, you set goals that were SMART:…

Read More

Start the New Year Right, Set Financial Goals

December 17, 2019

As 2019 draws to a close, many of us are looking toward the new year with big plans and aspirations. Carry this excitement over to your finances, too! Set financial goals in the new year to build a stronger financial future for you and your family. The previous year is history. You cannot go back…

Read More

Tackle Unexpected Expenses with an Emergency Fund and Help from Relief Societies

October 28, 2019

One of life’s certainties is that it is uncertain, right? Life can throw a curveball in the form of a lost job, vehicle or home repair, health costs, or emergency travel, just to name a few. When these events occur, they can create havoc for a family’s financial stability. However, planning ahead and being familiar…

Read More
Primary Text Separator for Milspouse Money Mission, Financial Education for Military Spouses