Recently, we purchased a new-to-us suburban. With cash. It’s almost un-American, I know, to not take out a loan for such a buy. (And seriously, don’t get too excited. It’s a 2005.)
Truthfully, our last vehicle purchase was in 2003 and we took out a loan then (and paid it off in less than a year) because we 1) didn’t know any better, 2) needed a vehicle, and 3) didn’t have the cash saved up all at once. It happens, but we’d like to think we’ve learned a thing or two since then. Here’s why paying with cash is now a priority for us.
Value in Delayed Gratification
Paying cash for an item often means we have to wait for it. Waiting gets a bad rap, but it’s a good thing! It took us a few years to save up that money, and by doing so we likely took better care of the vehicle we had to make it last as long as possible. We also had plenty of time to strategize, research, and make sure we were buying exactly what we need and want.
In those years we were also able to look at our savings when a spending opportunity came along and ask, “do we really need this?” as we focused on our goal.
Goal for Saving
We all know that saving money is important and something we should do automatically, but without a concrete goal in mind for that savings, it’s easy to lose sight of the purpose and fall prey to spending whims. Expecting the expected gave us a goal for our savings, as we knew that that our family was growing and our van wouldn’t last forever.
Having money earmarked for a specific purchase helps keep the momentum going.
When purchasing an item, any item, with credit, there is risk involved. Paying cash gives us the security of knowing that if a financial emergency occurs, we don’t have to worry about how we will make the next payment. There are no payments to make!
No Wasted Money
Interest payments make me ill. I clearly remember the day we signed a bazillion papers to buy our first home with a 30-year loan (stupid). Our realtor said “Don’t look at the total here. It’ll just make you sick.” Ummmmm, yes. What a waste! It can’t always be avoided, but I can think of about a bazillion things I’d rather do with my money than pay interest.
Start Saving for our Next Goal
Because we’re not wasting money on interest payments, we can immediately direct all “would-be-interest” funds to a new savings goal. Braces for the second-born, a new basement, a new heating/cooling system for ours that is on its last breath during a scorching summer, bathroom/kitchen remodel, replace the pickup? (We have lots of choices!)
It Feels Good
Writing a big ‘ol check. Forking over the cash. I’ll admit it, I had a pit in my stomach. But still, it felt good. Our vehicle was paid for before we left the lot! Working together toward a common (hard!) goal is good for our marriage and motivates us to continue to do big things.
Paying cash isn’t always possible. I get that, and we could totally be there again someday. However, with the right mindset and a healthy dose of discipline, it often can be done! The rewards are many, so we’ll strive for it again.
What was your biggest cash purchase? What motivated you to get it done?