Money Listens

The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments. — Mad Magazine

Maybe you haven’t been tempted to buy an elephant, but I bet there are a lot of other things you’ve bought on impulse. In Financial Peace Dave Ramsey sets out five ways we can develop power over our purchases. There are plenty of salespeople who will tell our money what to buy, if we let them. The five steps will keep us from buying elephants.

1. Wait before making a purchase.
2. Consider your motive for buying.
3. Never buy anything you do not understand.
4. Consider the opportunity cost of your money.
5. Seek counsel before buying.

Number one can save a lot of money. Just wait before making a purchase. How long? Dave says at least overnight. I’m going to say a week, but a month is even better. Say you’re online ready to buy, or in line with the item already in your shopping cart. Don’t buy it. Instead, write it down somewhere, perhaps where you keep your spending plan/budget. Title it “Things I’m Considering Buying.” I keep my list in my Palm.

After waiting, if you really need/want it and it works with the budget, go ahead and get it. With cash, of course. If you’re like most people, after the impulse wears off you decide you don’t really need it. After a few weeks, you’ll find you’ve acquired a tidy wish list of things you can live without. (Or maybe it’ll only take a few hours for you shopaholics.) Now you have a great list of suggestions for gifts. Post the list on your fridge before your Birthday.

Don’t go overboard on this, I’m not talking about groceries or those things you’ve already considered and planned to buy. I’m talking about those impulse purchases that seem like such a good idea at the time. Things like going to Academy for a fishing license and coming out with an Avet Pro 30 Wide tournament class reel. Or getting your sister’s favorite perfume for her birthday and coming out of the mall with Ralph Lauren 400 thread-count sheets. From now on, don’t buy anything without waiting first.

This entry (Permalink) was posted on Friday, April 18th, 2008 at 4:00 am and is filed under Dave Says, Spending Less and Less. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response , or trackback from your own site.