Plan This Year's Big Purchases and Projects

Creating a budget for an entire year is never easy. There will always be things you don’t think of, and unexpected costs to contend with. But the mistake that many people make is not thinking about projects and large purchases, because they’re just thinking of month to month costs.

Big purchases and unexpected costs don’t HAVE to be painful. In fact, depending on the size of the purchase, it may hardly affect your spending around the time of the purchase, as long as you plan ahead! Weathering unexpected expenses may still have a significant impact, but there will be far less stress if you have a plan in place.

Step 1: Let’s brainstorm some common big ticket items so you can think about whether any of these might apply to you, and begin thinking about other things that might be more relevant to you. We are going to consider three types of expenses here- large item purchases; potential expensive repairs, planned and unplanned; and home improvement projects.

Large Purchases:
House
Vehicle
Refrigerator
Washer/Dryer
Stove
Furniture

Pricy Repairs/Replacements:
Car
Home air conditioning
Appliances
Roof repair
Furnace Replacement
Water heater

Home Improvement Projects:
Build a deck/patio
Kitchen renovation
Re-tile bathroom
Upgrade insulation
Replace carpets
Repaint the walls
Pool installation

Do any of these sound like things you may be considering purchasing this year, or sound like bad news you’re worried you might get hit with? When it comes to financials, planning for the worst is undoubtedly better than not planning and getting hit with the worst anyway. Go ahead and create a list of all the things that apply to you- don’t worry, this isn’t a final list, just a draft.

Step 2: The next step is to prioritize your needs. First you should confirm anything on your list that is at risk for an unexpected break or failure within the next year- that includes anything that isn’t running well, is falling into disrepair, or that would be very financially stressful to fix if it did break. You will budget for those items first, and see if you have room for anything additional. Make sure you have insurance that covers these at-risk items, if available. Check to see if you have warranties that you might be able to extend before they expire. After you’ve listed your needs, the number of additional things you keep on your list is dependent on how much extra money you can set aside each month. You may want to choose your top large purchase, and choose one home improvement project to start.

Step 3: Determine the “when”. You want to plan so that you will be able to shop the off-season, so that you have some time to save some money up front, and so that you don’t find yourself out in the hottest part of the year building a deck. Depending on what’s on your list, some things have distinct seasons, and since you’re planning ahead, you want to plan so that you’re making your purchase in the off season. For example, it is better to buy gas grills and air conditioners in the late fall. If you’re not sure what the right time to buy is, Lifehacker’s “The Best Time to Buy Anything in 2013” is a great place to start.

Step 4: Do your homework. You don’t have to do everything all at once, but get started now. Research prices online, and call to get quotes from a bunch of different companies. That way you can get a good ballpark idea of cost, and you’ll be able to budget accordingly. Because you’re doing your research ahead of time, you won’t be feeling pressured to make a decision, and it will be easier to ask the right questions and think things over. Also, ask everybody you know for referrals or recommendations throughout the year on brands, or contractors, or equipment. Use online directories like Angie’s List to cross reference, so you aren’t walking into anything blindly. When it’s time to make your final decision, you’ll be ready.

Step 5: Don’t forget to consider hidden costs like maintenance, insurance. Will you need a warranty? How much do these things cost? What is a reasonable lifetime for the item you’re purchasing?

Step 6: At this point, all of the hard work is done. Create a budget for each item. How much can you devote to additional monthly payments overall? If you think you’d be hard pressed to set aside enough each month to cover the cost on your own, you may want to consider a loan. Getting a loan with good interest rates will require research too, so don’t wait till the last minute.

Step 7: Check your credit report. You don’t want to be completely set up and ready to make your purchase, or ready to apply for your loan, only to find out that you have something ugly on your credit report you didn’t even know was there.

At this point, you’ll be significantly more prepared than most. Also, it is easier to save up for big purchases when you can minimize monthly bills. To cut some of your monthly costs and get the best rates possible for your home services, be sure to visit us at WhiteFence.com. Good luck!