Credit cards and payment plans have become the preferred method of payment for goods and services among the majority of Americans. This preference has attributed to the culture of debt we see and experience today. While there are proper ways to utilize credit, many people are unfamiliar, unaware, or don’t want to use it in a way that avoids building debt. Pre-planning, coupled with self-control, allows for better money management and leads to eventual debt reduction. Thinking and planning long term can help tackle expenses through careful research and comparison. One way to reduce your debt burden is to save money by paying upfront.
Payment Plans Can Cost More
At first, upfront costs can be intimidating. It’s a large chunk of money. Of course, it’s so much more tempting to go for the low monthly payment on a credit card or payment plan. However, these monthly payments are often tied to interest rates, which add even more cost to your original amount. Through pre-planning, you know what you can and cannot afford. The key is to learn how to save up for big expenses. Life happens, right? This is where your emergency fund comes into play. We’ll talk more about emergency funds down the road, but the point is that you should have money squirreled away for what could happen or even for your own personal goals.
How Do We Plan Long-Term?
Eventually, Brian and I would like to turn our home into a rental property. There is no dedicated timeline or faint idea as to when this will happen, but it will happen one day. In preparation for this plan, we decided to upgrade the appearance of the exterior of the house. In January, we hired out a company to replace the trim and repaint the exterior of our home and deck.
Our house was built with wooden trims, which we have already had treated and replaced twice over the course of 8 years. It seemed silly to continue to replace the wood, so with the expertise of my dad, we decided to have all of the wooden trims replaced with vinyl. While this was an expensive upgrade, we will never have to replace these trims again! We used the highest quality paint available to avoid having to repaint the home anytime soon. All in all, we replaced two rotting boards on our deck, replaced all wooden trims with vinyl, and repainted the entire home and deck. We researched and planned for this improvement, which allowed for us to allocate the funds to pay in full. Doing so saved us money in interest payments, as well as money down the road if we had continued with wooden trims and poorer quality paint.
Avoid Unnecessary Costs
There are many instances in which you can save money by paying upfront. Whether it’s having to pay interest on a credit card payment or a mortgage loan, paying upfront allows you to avoid interest and gives you the freedom to use those funds for whatever you please. Not only can paying upfront help avoid interest payments, but with due diligence and proper research, it can also help you avoid unnecessary costs in the future. For us and our home, this means that we won’t have to worry about replacing wooden boards anymore. It also means that we won’t have to re-paint our home for years to come.
Eventually, we will replace the carpet in our home with laminate flooring, which will also curb the cost of having to deep clean and/or replace carpeting when we convert the house into a rental property.
In what ways have you saved money by paying upfront? Comment below!