Comments on: Planning your Purchases Far, Far in Advance

By: Posts I Enjoyed Last Week

Posts I Enjoyed Last Week — Fri, 14 Nov 2008 05:35:34 +0000

[...] Man at Lazy Man and Money suggests that if you are going to make a big-ticket purchase, you should plan it far ahead. What you will gain from this method is interests you earn by setting aside the money in a savings [...]

By: Lazy Man

Lazy Man — Tue, 15 May 2007 15:12:33 +0000

The median home price in my county is $870K – and that doesn’t get you a home with two floors or a basement. I also believe in putting down 20%, which requires savings, $174K. Lastly, I don’t expect to plant roots here in California. I’d like to move back to Boston in the next 3-4 years.

By: Customers Revenge

Customers Revenge — Tue, 15 May 2007 13:44:39 +0000

Regrets . . . I have mine too :) Getting good at saving definitely builds character. I have the same feelings. Why can’t you buy your house now? Reading your bio, you have good income now. Why save in advance for a house?

By: Lazy Man

Lazy Man — Tue, 15 May 2007 02:04:06 +0000

Yes, it’s always something that you have to weigh. For me, right now, the top thing on my want list is a house in 5 years (while still retaining my condo which I rent). I wish I had started saving for this 10 years ago. There are a lot of things that I used money for “something else” only to discover that money went to waste.

By: Customers Revenge

Customers Revenge — Tue, 15 May 2007 01:38:24 +0000

I don't like the general recommendation to save and I totally agree with dong's comment. I wrote a longer response on The Real Value of Money but the main thesis is that one should remember time and enjoyment of money is not free. You can make anything worth huge amounts or money, or very little simply by changing the way you present the calculations and what costs or benefits you count or don't. Take the measurements against things you value, not apparently free money.

By: dong

dong — Sun, 13 May 2007 20:47:53 +0000

I think it’s great planning ahead of time for purchases. Though I think sometimes planning to far in advance is not a good thing. It’s a less of an issue with saving money because that money can be used for something else. However by saving money for tomorrow implies not spending the money today which does have a cost. Tomorrow might never come. That’s one reason a dollar today inherently is worth more than a dollar tomorrow.

By: moom

moom — Sat, 12 May 2007 15:58:23 +0000

Yes, if you are in a moderately high income tax bracket or a high tax state, after taxes and inflation 5% interest just holds the value of your money constant.

By: jjoa

jjoa — Sat, 12 May 2007 11:46:19 +0000

What you said is quite true. I’m about to start compounding up my savings myself, and I have discovered already what a bummer inflation can be. Not to mention taxes. It turns out that you put your money in a high-rate compounding account and you are lucky if you can just keep pace with inflation and taxes. It’s like pushing your money forward so that it will stay at the same place.

By: Jim

Jim — Sat, 12 May 2007 05:25:46 +0000

Dang – that’s $36,000 not $24,000.

By: Jim

Jim — Sat, 12 May 2007 05:24:24 +0000

Hi – very well said. I love high interest savings accounts. I’ve had one from ING Direct for about 6 years, and it’s paid me about $4,500 since I opened it.

The other thing NCN could also do is use a cash back credit card and pay the balance off in full every month. For example, let’s say his monthly expenses were $1,500. That would be $24,000 worth of expenses over 2 years. Many cash back cards pay between 1-5% on purchases (depending on the type of purchase it is). To keep the example simple, let’s say his “average” cash back percentage is 1.25%. On $24K, that would work out to be an extra $450 to go toward the car.