Preparing for a Large Life Purchase

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Larger purchases such as homes, cars, renovations, or vacations can improve our lives in many ways. But too often, these life changing purchases end up causing people stress, grief, and buyer’s remorse. The cause? Unmanageable debt that is oftentimes unexpected and more than anticipated.

Like all other aspects of your finances, a little preparation goes a long way, and will most likely save you money. At the very least, it will allow you to manage your expectations before making the purchase.

Here are some simple steps to help you prepare for life’s large purchases:

Start With Savings

If you’re considering making a purchase that is going to have a big impact on your finances, the first step should always be a temperature check on where you currently are financially. If this is something you haven’t been saving for, now is the time to start putting money away. The more cash you have to put towards this up front, the less you’ll need to pay in interest, and the less likely you’ll fall into a situation you can’t get out of.

While you’re saving the money, take the time to consider how this purchase is going to affect not just your finances, but your lifestyle. Is the extra cost going to be worth it in the long run? If there are doubts about being able to cover future costs, or if you’re having a tough time saving enough money, perhaps you should reconsider. If you’re confident that you’re still living within your means, and were able to save some money to put towards your purchase, it’s time to look at some other great steps that will prepare you for maintaining that financial stability.

Secure the Best Interest Rates Available

If you’re like most people, you probably don’t have all of the cash available to make the large purchase you have in mind. That means you’ll be borrowing money, but that isn’t necessarily a bad thing. If you’re able to secure low interest rates on a loan, you’re one step closer to maintaining a debt that you can manage with ease.

Research rates with lenders for a home purchase is pretty simple by working with a mortgage broker, who can provide all the different types of mortgages available to you. Buying a car? Keep your eyes open for 0% interest as a buying incentive, or ask the dealer for a few different available options from lenders.

But, for big purchases that don’t come with the benefits of 0% interest or the low rates of a mortgage, don’t immediately jump to your credit card. If you need to remodel your kitchen, for example, paying for it with a credit card is going to cost you hundreds in unnecessary interest. Consider taking out a line of credit, or shopping around banks for loans with great interest rates. The point is, a big step to avoiding a pit hole of debt is doing whatever it takes to keep your interest rates down.

Understand all the Costs Involved

Big purchases are very rarely cut and dry when it comes to what you’ll be spending. When you’re purchasing a car, and you’re looking at price tags, keep in mind the additional costs that are going to be tacked on before you drive off the lot. There will be freight and taxes that can easily hike a $25,000 car to a $30,000 purchase. Add in a maintenance package, things such as undercoating, a set of winter tires, then car insurance,and you’re looking at about 25% more than what you originally expected to pay.

If you’re buying a home, you need to count on high closing costs in addition to your down payment, including lawyer fees ($1,000 – $1,500), deed transfer tax (1% of the purchase price), home inspections (about $500), and other commonly overlooked costs like life and disability insurance.

If you want to avoid going into debt due to unexpected costs, make sure you’re seeing the big picture of your purchase. If you only discover these costs near the closing of a sale, you’ll be less likely to back down from the purchase, even if you can’t afford it. Understanding the overall cost ahead of time will offer you the opportunity to avoid making a purchase you can’t afford.

Have a Plan

When you go into debt in order to make a large purchase, it doesn’t need to result in stress. Approach your purchase with a plan that goes beyond securing great interest rates and researching what your purchase is going to cost you.

Talk to people who have recently entered into similar large purchases. They’ll be able to help you understand all of the extra costs involved. Ask about any surprises, and what they would have done differently. Request advice on things they are glad they did, or other people who have helped them. You can’t have enough information before making a large purchase.

Map out how you’re going to afford your payments, and don’t forget additional monthly costs associated with your purchase. A car will require gas, maintenance, and insurance. A home will require furniture, upkeep, insurance, and property tax. Through thoughtful budgeting and smart planning, you may even be able to find ways to pay off your purchase sooner, saving you hundreds – even thousands – in interest payments.


A bucket list trip to another country, a new car, an addition onto your home, or any other life changing purchase can be extremely exciting. Let that excitement last, and most of all, let that excitement be worth it by keeping a handle on your debt. A few smart decisions will ensure paying your purchase off is painless, and keep you out of unmanageable situations.

If you find a major life purchase has put you in a tricky situation, we could be able to help get you back on track. Call us today.