Wants and Needs - Next Steps

Let’s say that you have decided that you really NEED a new fridge. The next question is, can you afford it? Or are you thinking to yourself, well, it’s only another $10 a month. You really need to look at your income. That is your starting point. How much money do you make? i.e. What do you take home after taxes and deductions? That is your spending money. You can choose to spend all or it or some of it. But you should not be spending more than you have.

Every time you put something on a credit card – you had better look at the interest rate you will be paying. Add that to what is coming out of your income. Not only that, you may find that you pay up to three times the original price of the fridge by using a credit card instead of cash.

Let’s take it back to basics:
How much is your income?
How much are your fixed expenses?
How much money do you have left over after your fixed expenses? It’s that figure that should prompt you on how much you have to spend on that fridge. If you cannot afford it from what you have left over – you don’t buy it unless it is an absolute emergency. But remember, very few things are an absolute emergency.
So now we come back to wants and needs. Do you want that fridge or do you really need it? Can you make do with the fridge you already have, or is it beyond repair and your food for the family is rotting because it is not in the fridge?
Is there a way that you can exchange services with someone who has a fridge? Does someone have a fridge tucked away in their garage that they are not using?
If that’s not possible, there is always Trade Me in NZ or EBay around the world.

The best way to pay for anything is with hard cash. Then you are able to negotiate a much better deal. There is a lot of competition out there right now for your business, so make sure you negotiate assertively. Check around all the retail outlets, do your homework and then you will be in a stronger position to get a better price. It’s amazing what is negotiable. For example, I went to upgrade my memory for my laptop. I managed to negotiate the store down from an original quote of $280 to $200!

I’ll talk about negotiation in more detail next week. The first step it to have some cash jingling in your pocket to get the best bargains. Have a great week and only buy what you need!