Saving Money - part 2

Saving For Purchases:

The second thing we save money for is purchases. 12 months same as cash is NOT the same as cash. It sounds like it'd be the same, but it isn't. Furniture, home improvement, and electronics stores do not want to help you. They want to make money, and so they have devised this way of making a killing off of people, and it's this 12 months same as cash junk. If they didn't make money off of it, would they do it? No way. 78% of people do not pay off 12 months same as cash within 12 months. So, if you play their game, 8 times out of 10, they will win. If you miss a payment, are late on a payment, or do not pay it off in full by the time the 12 months is over, you are slapped with not only a high interest rate, but you get hit with all ove the interest that accrued over that 12 month period as well. Chances are we all know someone (or ourselves) who have played this game and lost.

If by chance you played this game and paid it off in time, you didn't get away unscathed. Want to know why? Because chances are, by the time you finally paid that thing off, you started to hate it. I did this with a sofa and loveseat set from Rooms to Go. It was 24 months same as cash, and I thought it was worth it. It was this beautiful microfiber RED set and it was beautiful - until we got it home and started to live on it. By the time that thing was paid for, the back cushions were all smushed down, lumpy and ugly and the red couch started to turn every single piece of white fabric that went anywhere remotely close to it pink. I hated that thing when I finally owned it. If I had paid cash, I probably could have let it go in a yard sale and gotten something more practical without tinting capabilities.

If you still liked your purchase and you paid it off in time, you still didn't get away scott free. Want to know why? Because you paid too much fo rit. You will get big bargains and deals when you use cash. You cannot haggle when using credit or 12 months same as cash. We are going to have a huge lesson on how to do this later on as well. It is fantastic and oh, so true. I've done it. I've haggled. My family even gives me their cash so that I can haggle for them. Never underestimate the power of cash. When you walk in that store with cash, the sales associates will be hovering around you like vultures. They get all giddy when they see cash. We needed a new washer a couple of years ago, and I got $250 knocked off the price of it on my very first time of haggling. When our TV died last year, we saved up and had a yard sale to get some cash together to replace it. We found a nice TV on sale for $999 (that was the sale price). I was able to talk the guy down to $715 AFTER TAX by haggling. And yes, that's after the 9.25% sales tax in TN. Do you think I could have done that if I was planning on financing it? NO way because they saw that cash, they had the emotional reaction to it, and they were willing to make the sale so they could get their hands on it.

So that is why it's important to save up for purchases.