Saturday, 16 March 2013

Rule # 7: Spend within your means

RULE # 7

This rule came straight out of Dave Chilton’s The Wealthy Barber Returns in his chapter “Under House Arrest.”  Some of us think we have to keep up with the Joneses by purchasing more and purchasing better things. This is also apparent with major purchases- purchasing homes and purchasing furnishings. A lot of students are now thinking about buying their first home if not right after they graduate, but in a couple of years, so it’s important to address this issue.

Buy something you can afford. Perhaps you have been saving for a down payment for a couple of years now and you are thinking about buying your first home. Remember, your first home is often not your dream home, so keep that in mind when you’re in the market. Monthly payments should be affordable and should not prevent you from taking a week or two off of work to spend time with family or to go on a vacation.  Think about the lifestyle you will have when you commit to making large monthly payments.

Beware of handy-man specials. These “deals” can be tricky. The price of handy-man homes is often affordable for new graduates, but long-term – maybe not.  Before you purchase a handy-man special, think about the money it needs for repairs.  Conduct a cost sheet by going to the local hardware store and looking at prices for new floors, kitchen cabinets, bathroom tubs and toilets. Secondly, if you can’t do the work yourself, get a professional quote, maybe have a contractor come with you to tell you the overall price for repairs. Handy-man specials look affordable, but think about the cost once you have implemented repairs and renovations.

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