Good Sunny, Sunny Day To You All,
Coach Pedro is here to help and here to have a rant today about buying on HP. I hear you saying wait Pedro, "I need it". Well you better really need it because it will cost you in more ways than one.
Firstly you end paying interest, and lot's of it. Anywhere from 13-25%! That's enough to take a whack out of your bank and pile it into someone else's. Say you buy that car on finance.
- You borrow $10k, pay 18% interest per year.
- What's the cost? Well in interest alone that is $3,014!
- What could you do with a spare $3,014? Take a trip that you wanted, invest it.....your choice.
Let's go past the interest. You will probably get slapped with a set up fee and a loan administration fee taking your total up another $250-$500.
Ok, so far we have just been talking dollars and cents. Borrowing for this stuff can hurt you elsewhere. If you want to buy a house and you have a few things on HP what does that mean? Less money left, so less borrowing power. You may have to park those ideas to own a new home until you have cleared your debts. Ouch that is not too good. So is it worth that new car?
So Coach Pedro slams a big fat no on HP's and personal loans. What's the best way forward then? Well that is quite simple, save. You will feel so much better saving to buy what you want to buy. Put away some cash each week or month, that way you know you can afford it!
For your car in the example above. Keep the car you have got now. Jump online at Cash Control and set up your budget. You can decide where your money will go. If you want to save $10,000 that is $200 a week for just under a year, $400 a week for just under six months. Keep adjusting your budget until you hit that figure. It will be set up to run automatically and you just follow the rules.
When you get that car it's yours. Not the banks or the finance company's. You earnt it, you bought it, you can be proud of it. The car is just the start now you can get the next thing you want. That is the power of Control.
Pedro Taylor - Cash Coach