How to plan for those big financial purchases
Debt.com: 89% of people who budget say it helps them stay out of debt
(InvestigateTV) — A 2024 survey by Debt.com found that 90% of Americans budget their income, an important step to help plan for big purchases.
Cherry Dale, a financial coach with the Virginia Credit Union, said a budget is essential for big outlays such as buying a home, major appliances, or a new car.
Dale said to create a budget, start by getting a handle on how much money comes into the household each month. Map out all debt, monthly expenses and all sources of income.
“Looking at what money is coming in, what money is going out. What do you have in reserve, what is in your 401(k)? What are all of your options at the end of the day?” she said. “Explore all of those things. You want the best option that going to give you the lowest interest and the best payment to fit your scenario.”
Dale said the next step is to pull a credit report. The report will help people better understand their standing if they plan to finance a big purchase.
If there are things on the credit report that need repair, people should start doing the work immediately. If a mistake is found, they should contact the credit bureaus.
“Just be very wary of debt consolidation companies. There are legitimate ones out there, but you want to make sure they are not taking advantage of you,” Dale warned. “So really dig deep on what the fees are associated, if you go with a debt management plan as well.”
She said see if there’s any money that can be used for a down payment on a big purchase. Try to save up as much as possible the year before the purchase.
At the end of the day, Dale said the bigger the down payment on the purchase of a car or a home, the lower the monthly payment will be. And often times big down payments can also lower interest rates.
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