Even though I live a relatively frugal lifestyle, I enjoy nice things. The ironic thing is that if we purchased things like the average American, there is no way we could enjoy these nicer things. But by taking a few steps it’s possible to have your cake and eat it too.
The main ingredient to having the nicer things in life, as opposed to complete deprivation (which many equate frugality) is simply patience.
Here are five reasons it pays to wait for bigger purchases:
1. You can pay with cash: This one always seemed terribly obvious to me. Sure, you want a fancy vacation and you want it now. Why not wait a year and save up the cash, rather than put it on your credit card today and rack up the interest and credit card charges? It seems simple enough, but the average American wants it all now. If you didn’t change anything about your lifestyle except to switch to cash mode and start waiting a little more, you would save a lot of money in finance charges.
I would say this would even be true for cars. I have financed a few cars at 0% while I let my money in the bank grow, and even a couple of times when I didn’t have the cash right away, but I was close to having it. But I have never paid a dime in consumer interest, not even for a car. I can’t tell you how much money this has saved me over the years, compared to the average person. Plus when you pay cash for a car, you buy what you truly can afford. It is too easy to get lured in over your ahead with low monthly payments.
2. You can find the best deal: Let me put it this way — my husband has some really fancy video equipment. There is no doubt that he is a videophile. But while most people would imagine his collection costs tens of thousands of dollars, it is probably 1/3 – 1/2 the price of what most people would imagine we paid for it.
He has been bugging me for a HDTV for about ten years. Obviously, ten years ago when HDTV was in the early adopter stage, it was not the time to buy. But he finally got his beloved TV last month for about 1/10 of what he would have paid for it a decade ago. For one, he waited for the technology to get better and cheaper. There is no doubt he would be unhappy with a decade old HDTV today. It wouldn’t be anywhere near the best.
Maybe even more importantly, he scoured the Internet and ads and knew exactly how much all the HDTVs cost. One day when an insane sale popped up (60% off) which finally made his decade old dream come within our price range, that was his cue; his years of patience paid off. We actually purchased a better TV than he had been planning to buy and for less money than we imagined it would cost.
The same was true for his beloved video projector. He saw it in an online ad for an insane deal. He purchased it honestly thinking it was a typo, but when it came through at that price he was in 7th heaven.
We purchased our laptop and our cars in this same fashion. We had specific models in mind but we waited patiently for the best deal, and ended up saving tens of thousands of dollars by simply waiting and watching. Waiting a decade may be extreme for many, but waiting a few months or a year is not that much of a stretch to potentially pay half as much for a big purchase.
3. You can walk away from a deal: You don’t know how many times I have been shopping for something when I get cornered by a high-pressure salesman. Just being willing to walk away will often call their bluff and you can see a dramatic price decrease. One terrible example I can think of is at a timeshare presentation. While I would never recommend purchasing a time share, the example illustrates a point.
We had gone for the free poker chips (Vegas) and free food, etc., and had no intention of buying a timeshare. We nicely said no to the $15k timeshare, and then they lowered the price a bit. We got up to leave, and they begged us to take the thing for $6k. $6k! From $15k. The price did not drop so substantially until we got up to leave.
We have encountered this a lot with furniture as well. We have started to leave because in negotiations we could not agree on a price. Sometimes all it takes is walking away and they change their mind and drop the price substantially. Having patience and waiting gives you the ability to walk away. If they don’t cave, you’ll find a better deal elsewhere anyway. Just know it goes both ways, but you will be less willing to cave if you know you have time and that there is no hurry. Salesman know you will pay a premium when you have to have it now!
4. You can find better quality: Generally, the longer something has been on the market, the more kinks have been worked out. For electronics, you can get more for less with time. For cars, recalls have been worked through, more crash test data is available, etc. By waiting you can gleam more knowledge and have better faith that you are getting the best deal for your money.
By waiting, you have more time to read reviews about products and research the best deals. I find we don’t spend a lot of money replacing bad electronics or faulty consumer goods. We tend to buy things that should last longer than we need them. Sometimes reading consumer reviews is all it takes to weed out what you clearly don’t want to waste your money on.
5. It’s a good test to see how bad you want it: Finally, waiting for something gives you the opportunity to know how badly you really want it. I still want a 2000 Camaro today as badly as I wanted one way back in 1999. I am planning to buy one in the next few years. It certainly will be a lot cheaper in 2010 than it would have been 2000. Obviously this case is a little extreme. But why buy a brand new car today, when it will be available at a steep discount in one or two or three years?
A more important point is I couldn’t tell you all of the things I wanted to buy this past decade, but at the time I couldn’t buy it and therefore didn’t buy it. I really don’t remember all these things. That is evidence enough to me that I didn’t want them that badly. The stuff that I remember that I really want, I know will be good purchases when the time comes. In addition, you truly appreciate these purchases more when you have to wait for them.