Monday, November 11, 2013

Budgeting: Delayed Gratification

I've shared a few of our financial success stories with you before, and you already know how we do our monthly budget following many tips from Dave Ramsey. But I have one more area I'd like to discuss: Delayed gratification and saving up for those big purchases.

Several years ago, let's say three or so, I decided I wanted to buy a new camera. A full-frame DSLR camera, something I could use if I decided to go professional. Well, three years ago we were not in a place to make such a purchase. Any money we had left over from our expenses was going toward paying off loans and setting up our emergency savings. Sure, I could have put it on the credit card and had it in my hands that very month but it would have ended up costing us more with interest if we couldn't pay off the balance right away. And there were a few other things we wanted to save up for as well. The camera just didn't make the list of top priorities.

So, what did we do? (Giving up on the idea was not an option!) We set up another savings account for the sole purpose of purchasing the camera. Every month, as long as we were able, we tucked away $25 into that fund. Not a huge amount at all, but it was something! When our loans were paid off we increased it to $50. Slowly but surely, as the months went by, the fund grew and we were getting close! If I received money for birthday or Christmas gifts, I put that into the fund too. That made a huge difference.

And three years later, I purchased the camera! I ended up buying a refurbished DSLR since I wasn't willing to wait an additional two years to buy a brand new one. I had shopped Craigslist for months trying to find a used one in good condition but that seemed a little risky and the price difference wasn't that much better than the refurbished one.

It still seems unreal to hold my new camera in my hands and actually use it! Three years ago it seemed like that day would never come. I don't feel like I really missed out by not having this specific camera and I'm more ready now than I was then to attempt professional photography. I'm so thankful that we didn't go into debt to buy it and it didn't hinder us from reaching our other financial goals!

We've used this model quite a few times for larger purchases: a road bike, our trip to Europe, and most of our flights to Minnesota or Texas. The amount varies depending on how quickly we need to make the purchase and our available funds. For the most part, this works really well for us. I think the best part is never really feeling "hit" by a large purchase and having to struggle to make the budget work because we had a big credit card bill to pay.

If you know you will have a large purchase to make in the future, or really want something that is out of your budget, try saving up for it instead of using a credit card/incurring debt or trying to scrape together enough money now. Set aside a specific amount each month so you won't feel financially stretched when you make your purchase. There is freedom in delayed gratification. And it feels good!

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