May 7, 2009, 6:00 am

A Frugal Tip To Stop The Urge Of Buying

by: The Financial Blogger    Category: Frugal
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urgeAs you probably know if you read this blog on a regular basis; I am not the most frugal guy on earth. I am actually able to save money and increase my net worth because I am making a decent income and from my investments; not because I save a lot from my pay check!

I recently went shopping to buy a new car. I can tell that there is a huge risk when you are looking for cars when you are a guy like me: I just love to drive! Therefore, there is a chance that I could “fall in love” with a specific model. This is very dangerous as cars are really expensive and are part of depreciating assets you don’t really want to accumulate through your life. In fact, having a nice car is nothing but a nice expensive toy. It engulfs money through gas, insurance and maintenance while it doesn’t create any value. It is a real cash flow eater.

However, when you are sitting on a nice and comfortable leather seat and your foot is going down the accelerator and you hear the motor roars… you don’t necessarily think about the money going out of your pocket each month to “feed the beast”. This becomes even more dangerous when you have a car salesman in front of you that is really looking to make a sale.

A smart salesman will wait until he sees the sparkle in your eyes and then make you an offer that you didn’t expect. This offer will destabilize your brain that was already looking to reproduce the nice feeling of driving this brand new car you drove a few minutes ago. “If you want this car, I give you the upgraded version with leather, sport package and sunroof at the same price…. What do you think?”. This is when your mouth wants to say yes (your non verbal language already did!).

So how can you stop this urge to buy?

Since I didn’t find a way to stop the urge coming to my mind, I decided to find another solution to solve my problem. While stopping the urge would require discipline (and in some cases it is a lot of discipline), my trick only requires awareness.

When I realize that I really want to say “yes”, I sit back and make the conversation ends right away. This is how I told the guy that I was going to give him an answer tomorrow. I didn’t give him time to reinforce what was included in his offer or that he won’t be able to make it again tomorrow (that’s salesman bullshit anyway). So I didn’t say no (which requires much more discipline) but I didn’t say yes either.

When I came back home, I was still under the feeling that I was buying the car. I felt the very same way the next morning until I get my brain occupied by my work instead of by “my” new car. At the end of the day, I was back “to normal” and I was able to make a rational decision about this new car.

The deal was great, but did I really need this car with all those options? Was it really useful or was it just for fun? The answer was that it was for fun and that I was increasing my monthly payment only to please myself.

So you have to remember this easy trick:

When you want to say “yes” and buy right away; just turn around and go back home. Tell yourself that you will buy it tomorrow. Everything is available 24 hours after you “discovered” it. There is no rush to buy. Take the time to think about your decision.

Rationale expenses always come with less remorse 😉

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[…] The Financial Blogger has A Frugal Tip To Stop The Urge Of Buying. […]

Re: personal vehicle as a depreciating asset

While true on the surface (cars do tend to lose their value, and rapidly), think about what the automobile adds for certain kinds of car buyers. For instance, for an HR manager living near a subway line and working out of a downtown office, yes, the car is a depreciating asset. It’s a drain on net worth, and may not necessarily add anything to this person’s life, as she can already get to and from work via public transit.

On the other hand, think of an outside sales rep living in Milton, and most of his sales calls are spread out across the GTA. The car not only adds value by allowing him to get to and from his clients, but can hold its value by not needing excessive maintenance and repair. The ongoing sticker price of the vehicle matters less than whether it will reliably enable him to perform his job.

I used to be cynical when it came to automobiles as well, but I no longer believe it’s fair to knock them for not holding their value. They are a smart investment for the right person.

[…] The Financial Blogger gives us a frugal tip to stop the urge of buying. […]

[…] Financial Blogger has a frugal tip to stop buying. […]