Should I save or should I charge now?

Throughout your lifetime there will always be things you want to buy in addition to your normal living expenses.  It may be a new computer, a gift for a special person, a nice vacation, or something for your home.  All of these larger purchases take money and you will be faced with a decision – “Should I save until I can afford to pay cash for these things, or should I just buy them now using my credit card?” While you should probably save and avoid interest costs on your credit card, the temptation to buy them now can be strong.


Let’s say you want to buy a new $1,200 computer.  You could save $100 each month for a year and pay cash.  Or, you could use a credit card and buy it now.  If your credit card has a 15% interest rate and you pay $100 each month on your balance, it will take over 13 months to pay off the $1200 computer.  Over that period, you will have paid about $108 extra in interest.

Temptations come up all the time and the point is not that you should never charge things on your credit card, but rather you should understand that paying interest can be expensive. By learning to save now you can ready yourself for larger purchases down the road.

Speaking of large purchases, buying a home is the largest purchase most of us will ever make. There are plenty of steps in buying your new home and many begin months before you even start looking at homes.

Figuring out how expensive a home you can afford will largely be dependent on the level of monthly mortgage payments you can afford. Our mortgage team is here to help answer any questions you might have throughout your purchasing experience.

Most lenders require a certain level of down payment before they will consider you for a mortgage. The larger the down payment, the smaller your monthly payments will be. To get started check out our mortgage loan calculators to find out what you can afford.

Here are some tips on how you can start saving:

  • Save more from each paycheck
  • Move to a cheaper apartment
  • Reduce other high interest rate debt
  • Get a second job

Whether it is buying a new computer or buying a home, be sure to consider saving ahead and make sure to fully understand all of the costs of borrowing before you sign on the dotted line.

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