On another finance site that I frequent, a poster asked for tips on how to afford an expensive car without incurring super-huge payments. She wanted to know if there were any “out of the box” ways to magically afford such an item. Bottom line: She wanted a car that her income couldn’t comfortably cover and she was hoping that there was some magic bullet that would enable her to afford such a thing.
Of course, it wasn’t long before the other posters jumped all over her and, in a way, rightfully so. That post was indicative of what has gone wrong in many people’s financial perspectives. Many people feel entitled to own anything, no matter how expensive or out of line with their incomes. There is a feeling that everyone can “afford” anything, as long as they pull the right strings or uncover the secrets that everyone else seems to know.
Unfortunately for this poster and for everyone else, the truth remains the same. There are no magic bullets, shortcuts, or secrets to affording big ticket items. If you want something that is beyond your current means, there are sensible and stupid ways to go about getting that item. Too many people opt for the stupid ways, to the detriment of their finances.
Go into Debt (Stupid)
This is what many people choose, but it’s the least advisable. Doing so means that you can’t really “afford” the item, only that you managed to find someone to lend you the money to pay for it. You still have to make payments that likely stretch your finances to the limit. All you’ve managed to do is acquire the item; you haven’t made it any more affordable as you’ll find out when the repo man shows up when you’ve missed a few payments.
Let Someone Talk You into “Affordability” (Stupid)
Too many people want to hear that there is a magic bullet that will let them get the item they desire. This is how people get sucked into payday loans, loans that are too long, loans that carry adjustable payments, and anything else with a ton of fine print and “gotchas.” Don’t listen to salespeople or friends who tell you that they “can have you in that car (boat, RV, etc.) even if you have no income.” They can’t make the item any more affordable; they can only find sketchy ways to make you think you can afford it. You still can’t afford it.
Take Out a Loan for a Ridiculous Amount of Time (Stupid)
Some people afford expensive cars and houses by taking out loans that stretch for eight to ten years (this is not how you want to finance a car) or up to forty years for a home in order to bring the payments down to “affordable” levels. This only adds to the overall cost of the item in the form of excessive interest. Again, you haven’t managed to afford the item, you’ve only found someone who is willing to profit from the insane amount of interest you’re willing to pay.
Give up Everything to Free up Money (Stupid or Sensible, Depending on Your Priorities)
If you want to free up the money for a big ticket item, you can cut everything else in your life to the bone. You can quit going out to eat, pull the kids out of activities or private school, sell anything not nailed down, and give up vacations. If you give up all the extras in life, you might be able to “afford” that pricey car. But only you know whether it’s worth it or not. If you want this item more than anything else in your life, maybe it’s worth it. If, however, you want to have some other fun and experiences, it’s a stupid idea.
Bring in Extra Income (Sensible)
If you have your heart set on a super expensive item, you’d do well to find a way to bring in more money to pay for it. Take a second job, get a raise, or find some part-time work. With the extra money you may be able to finally pay for that item you want.
Save for the Item (Sensible)
Most people want instant gratification which is why this strategy is rarely used. Saving for a big ticket item requires years of discipline and focus but once you have the money saved to pay cash, you don’t have to worry about “affording” the item. You can pay cash for it upfront and it’s yours.
Do without the Item (Sensible)
Chances are you don’t “need” an expensive car or home. You can probably find something that works for you at a much lower price point. Many items you don’t even need at all. You can do your finances a big favor by just not getting the expensive item at all, or finding a cheaper substitute.
Buy Second-Hand (Sensible)
If you just have to have a certain model of car, boat, RV, etc. You can cut the price down by scouring the used market until you find something that you can afford. It may have more miles than you want on it, or not be the exact color you had in mind, but it’s also going to be thousands of dollars less than a brand-new model.
The only way to afford expensive items is to have the money to pay for them. That means making a bigger income, saving up, or cutting out other things that you don’t value as much. If something costs far more than you have, you can’t magically make it fit within your current budget, no matter how entitled to that item you may feel that you are.
(Photo courtesy of dennis and aimee jonez)