A Big Purchase Without Debt

By Laura Dauphine

After the holidays the last thing you want to think about is putting another purchase on your credit card. When you’re single, buying a new computer, TV, tires, or car down payment without accumulating debt isn’t easy. Making your salary stretch to cover the larger purchases in life while not having a sky-high credit card shouldn’t be unachievable. Here are three basic things you can do to make your cash work a little harder for you.

Split it up We’re talking purchases that are bigger than you could conceivably buy in one paycheck—while still covering rent, food and other monthly bills. If you can, plan your purchase when the price on that item will be on a seasonal sale.

Say your new tires will cost about $1500. Break out whatever the ticket price is into bite-sized chunks over subsequent paycheques You get paid twice a month and your comfortable withdrawal per pay = $50, so you’ll take about 30 payments, or 15 months to pay in cash.

Make it automatic Automatic withdrawals or pre-authorized contributions are the best way to save pain-free. Arrange to have your comfort amount withdrawn from your salary and kept in a high interest savings account if possible. Or, if you have close to the amount, throw the money in a locked in one year GIC or flexible GIC for longer if the purchase allows. That way the money isn’t as liquid or available to you and will be growing through even a little bit of interest as a reward for savings.

Keep it going Even after your purchase is made, why not put that withdrawn amount (which you’ve not seen in a while anyway) back in that savings account or to pay down your credit card bill? This way you’ll automatically have some savings for your next big ticket item, or for an emergency need like car repair/healthcare or even as a fund for something fun like a vacation. Or you can use the continued savings to automatically pay down credit card debt.

Either way, breaking it up, making it automatic and continuing to save are three simple and yet powerful steps to take to improve your individual financial health.