How to Buy a Bike and Other Major Purchases
July 11, 2011The other day I was talking to an extreme saver , Jonathan Fogel, an attorney in Brooklyn who follows something called “Retirement Extreme” where he is living off of 25% of his income and saving 75%. Until I talked to him, I thought he might be a little crazy! I must admit I have a bit of an anti-frugal bias because of some bad experiences when I was a young woman – having to buy everything at yard sales and shopping at the bulk stores. As a financial planner and financial educator, savings is highly valued, of course, but “extreme savings” has always been associated with “extreme pain” and deprivation. So, that is what I was expecting when I talked to Jonathan about his experience.
Jonathan had a completely different viewpoint. To him saving means freedom not deprivation and spending causes “extreme pain” because in the future he will have to work longer because he is not financially independent. What he does NOT do is purchase cheap things that may fall apart as that is not part of his plan. Extreme savings doesn’t involve the Dollar Store. He buys quality things albeit fewer things and his purchases are well researched and planned. By the time I got done talking to him, I felt like I was crazy for only saving 15% of my income instead of 75%!
I’d never thought of it that way. I asked him to please share some savings tips. I actually happen to be in the market for a mountain bike so when he used buying a bike as an example, I listened attentively to what he had to say. Here are his guidelines for making purchases:
Buy only what you need. I know this sounds simple but it is amazing how many purchases we make on impulse or without extensive research then using the item only a few times or never at all! That is wasting money. Jonathan carefully considers the usefulness of anything he purchases. Jonathan needs a bike since he lives in the city and doesn’t own a car, so a bike is definitely a need for him. In my case, I could get along without a bike but I want one for two good reasons – to use for errands instead of getting in the car to drive less than a mile (that’s ridiculous) and to enjoy the outdoors going on some mountain bike trails with my friends and family. In other words, I’ll use it.
Buy quality. Jonathan wants his bike to last forever – or at least for a very long time. He goes into the search with that in mind. He may spend a bit more to get the quality he wants so that the bike will, not only be the right fit for what he wants to use it for, but also is built to last. With a bike, he can get a tune up and replace the brake pads or even the gears on a solid quality bike rather than having to replace the whole thing in a few years.
Do your research. Read reviews. It is amazing these days what you can find out on message boards either by browsing or by posting a question. Nothing is perfect but it is sure nice to know the downsides from others before you make a substantial purchase. You have a better idea what you are getting into – or to outright walk away from because there are so many complaints about the product. With a bike, it is even easier since you can also test drive it at the bike shop or rent one for the day to try before you buy.
Wait for a good price. Once you know what you want and have researched the prices, watch for the best price. If you don’t want to buy new, of course, with all the research you’ve done, you’ll know a good deal for a used item and can make a smart purchase there also. Using the bike example, a good bike shop may make you a deal or will alert you when sales are forthcoming. This takes a little discipline but can be well worth it.
These four tips can help you save money and be happier with just about any purchase. First of all, many purchases will never get made since they don’t fall in the “need” category. Secondly, I know in the past, I’ve thought, “Why bother running all over town to save twenty dollars?” I now realize what goes into a purchase is a lot more than that. The thinking behind the purchase is the most important part. I need to ask myself if this really is something I will use and will add value to my life before I even consider moving forward.
I guess another question would be “Would I be willing to work another 6 months down the road to get this item today?
In my case, mountain bike, yes.
Prada purse, no.
What about you? What are you willing to spend money on that brings value to your life now?
What purchases are costing you a delayed future retirement?