I’ve been helping with the sale of a home the last few months. One of the things that I’m seeing are people trying to find a way to somehow come up with enough money to satisfy lenders. If they can somehow, they will just barely get in the door, and this home will be a millstone around their financial lives. I cannot contact these people directly. Because if I could I’d have one piece of advice for them “Don’t do it, it’s a trick”.
Sometimes we have things we really, really want that are just out of our reach financially. And we try somehow to come up with enough to pay for it. It could be to buy Blu-Ray player, or it could be a Gulfstream G650 business jet. How much wealth we have is not the issue. The problem is trying to buy something that we really cannot (yet) afford.
Buying something that is at the very edge of our affordability might work out. But it leaves no room for error. If the radiator goes out on the car, or Junior’s tuition gets hiked 20%, we could be in a world of hurt.
This however is not a bad news investment tip. Instead I think the desire for that new car or new home can be a powerful motivation. Instead of borrowing up to your neck and hang the consequences, we can use that desire to raise the extra money in advance. We can dump the cable TV, eat at home 29 nights a month, have a camping vacation this summer. Not as an endless denial of life’s pleasures. But in service of the goal of squirreling away several hundred, or several thousand, or several hundred thousand. So that we can comfortably afford that thing we want so much. And we can enjoy it once we have it without sweating bullets when the transmission ceases up.