People love buying stuff! The thrill of getting new things releases dopamine in your brain and can make you good – even if it’s just temporary.
However, those purchases come with a cost – sometimes requiring a loan that turns into several years of debt. That can quickly turn that no purchase sour and make you regret your decision later on.
Even small seemingly harmless purchases can add up over time. It doesn’t take too many $10 to $100 transactions before they begin to erode your monthly budget.
Before making any of the following purchases, you may want to think twice. Here’s why they might not be a good idea and regret them in the future.
1) A Brand New Vehicle
New vehicles are exciting! From that fresh interior smell to having the latest bells and whistles, it’s easy to see why there’s so much demand for the latest vehicle models.
However, being able to drive a new vehicle comes with a substantial price tag. Some luxury vehicles are priced between $60,000 and $80,000. Combined with today’s high-interest rate environment, that’s easily an auto payment of over $1,000 per month!
On top of that, no matter what new vehicle you buy, it’s at high risk of depreciation. Generally in the first year of release, most automobiles lose about 20% or more of their original value. The loss continues to decline each year from there shedding around 60 percent of its original purchase price within the first five years.
For this reason, consider buying a used vehicle instead – preferably around 2 to 4 years after it’s been in production and depreciation begins to slow down. If you absolutely must have a new vehicle, then consider leasing instead.
2) The Latest Electronics
There’s a lot of hype over the latest consumer electronics:
- High-definition TVs
- Laptops
- Mobile phones
- Etc.
Even though these gadgets can be a lot of fun, they also come with a premium mark-up. For example, when QLED TVs were first released about five years ago, they cost around $2,500. Now you can easily find them for a few hundred bucks.
A better alternative for buying cool tech gear is to wait until the current model is phased out by a new one. For example, the latest iPhone can easily cost over $1,000 out of pocket. However, when a newer one is released, they’ll usually give a deep discount on the previous generation – many times offering it for free with a trade-in of your current product. That’s a much better deal.
3) Unnecessary Home Upgrades
It’s important to stay up to date on the maintenance of your home – both functionality and future resaleability. However, bear in mind that customizing its appearance based simply on your tastes and preferences will not always be a good investment.
According to experts, the following remodels have some of the worst ROIs (return on investment):
- Upsale primary suite addition, ROI = 22.7%
- Upscale bathroom addition, ROI = 26.6%
- An upscale major kitchen remodel, ROI = 31.7%
(Notice the theme with the word “upscale”?)
Instead, focus on home improvements that will do a better job of being recouped later on. These usually include:
- Updating the roof
- Replacing the furnace
- Adding an outdoor space (like a deck or patio)
- Minor kitchen or bathroom remodel
4) Designer Clothes
You’ll often hear in advertisements and social media that having nice clothes is an investment. And while it’s true that higher quality outfits will last you much longer than cheaper ones, you have to be careful about how much more you spend.
Designer-label clothing or accessories are significantly marked up from what they cost to produce. Many times this price is only for a particular label or logo that people are hoping will improve their social status and impress their friends.
However, because fashion can be fickle, these items rarely hold their value. You can go on eBay and find used items selling for a fraction of the brand-new price.
At the same time, similar and comparable products without those well-known names can be purchased for a fraction of the cost. Weigh your alternatives and go with low-cost alternatives whenever possible.
5) Timeshare Vacation Properties
Vacations are fun family activities, and timeshare companies know this. This is why it’s such a lucrative business for hotels and property management companies. However, there’s a dark side that often goes unheard.
Many people who get involved with timeshares quickly wish they hadn’t. This is because they quickly become frustrated with the lack of booking dates or grow bored with the available destinations.
Perhaps the biggest problem with timeshares is the annual costs involved and the fact the contracts are nearly impossible to break. Once committed, you’re on the hook for paying $1,000 or more per year – sometimes more depending on the size and provider. And those costs go up every year!
Therefore, don’t believe the hype that a timeshare salesman tries to sell you. Skip the presentation and vacation on your own terms.
6) Eating Out for Lunch Everyday
As busy working professionals, it can be difficult to remember to prepare a lunch to take with you every day. Plus, eating out at restaurants with your coworkers and friends is a lot more fun than eating alone at your desk. However, this is a bad habit to develop.
For starters, eating out lunch can easily cost between $10 and $15 each time. Over the course of 52 weeks, that’s $520 to $780 in unplanned expenses.
On top of that, your health could be at risk. Food prepared at restaurants often has far more calories and lower-quality ingredients than what you can prepare at home. When utilized day after day, that will quickly add inches to your waistline.
A better alternative is to plan ahead. Use Sunday to meal prep and prepare food that you’ll enjoy eating. You could also make bigger dinner portions and take the leftovers the next day to work.
7) Unused Subscriptions
Can you name every subscription service you use? Chances are there are probably at least one or more that you’re forgetting. According to a survey, 42% of consumers forgot they are still paying for a subscription they no longer use. Most of these originated from a free trial that silently transitioned into a paid one.
This is precisely why nearly every business has moved to this model – they’re hoping they can continue charging you a monthly fee without even realizing it. And while $8 to $16 per service may not sound like a lot, they can really start to add up month after month.
Therefore, make a list of which subscriptions you have. Go through your bank and credit card transaction history to refresh your brain. If any stand out as being of little use or value, then cancel them right away.
Featured image credit: Pexels
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