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 financial 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.

ASSESS YOUR NEEDS:

• 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 10% 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.