How To Make Large Purchases at a 12% – 28% Percent Discount

In this blog post I’m going to show you step by step How To Make Large Purchases at a 12% – 28% Percent Discount.

The reason I’m writing this is to help my mother pay for a $10,000 bathtub renovation. She tells me all she has is a credit card with an 8.5% interest rate that has a limit of $4,000 and no savings.

So here we go.

Step #1 – Find out exactly how much your large purchase costs.

What is your large purchase? Step 1 is to find out exactly how much your large purchase costs. I sent 2 contractors and 1 plumber to her condo to give her estimates. The lowest estimate came out as $9,174.36 including tax.

Step #2 – Open a High Yield Savings Account (adds a 3% – 5% discount)

The next step if you have little or no savings is to open a high yield savings account. CLICK HERE for a very comprehensive list, which at the moment has rates of 3% to 5%.

As you save for your large purchase, your money will be growing at the interest rate on the account. So if you pick a savings account that has an interest rate of 4%, then your account will be growing everyday by that percent.

Here’s some simple math to get you an idea.

If you are saving $500/month for your purchase then here’s an idea of how it will grow.

Month #1 – $500 x .04 / 12 months = $1.67 in interest the first month

Month #2 – $1,001.67 x .04 / 12 months = $3.34 in interest the second month

Month #3 – $1,505.01 x .04 / 12 months = $5.02 in interest the third month

You can CLICK HERE for an easy to use savings calculator.

Step #3 Be Patient and Avoid Using Your Credit Card or Other Debt (adds a 8.5% to 24% discount)

Step #3 is to be Patient and avoid using your credit card or other debt. This is where purchases become more expensive to consumers without them even realizing it.

They charge a large purchase on a credit card and think they are just going to make payments.

Well, credit card interest is usually very high, and this automatically adds that interest onto the purchase price.

Conclusion

This is a very difficult lesson that most consumers never get. I’m going to be helping my mother with this today, and wanted to get it written out clearly to help her understand.

I also want you to understand, as you might be looking at financing a large purchase.

Do you have to buy it today?

Can you save for it at a 3% – 5% interest rate instead and save all of the credit card and loan interest?

The extra savings is huge with a little patience.