Saving Up And Paying Cash For The Things You Buy Makes The Purchase More Enjoyable!

My wife and I have been out of debt except for our mortgage for a couple of years now. I can still remember paying off that last debt, my student loan, and how good it felt. It was like a weight had been lifted off of my shoulders, and we were now free. I can’t even imagine how good people feel who have finally paid off every debt, including their mortgage. You must become weightless, and float off into the sky! Free like a bird!

Since we’ve been debt free we’ve also been following some other good principles of personal finance like following a budget, spending less than we earn and making do with what we have instead of spending to buy new.

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save up and pay cash

One of the big changes that we’ve made is that now we’ve started not making any big purchases without first saving up the cash for those purchases. If we can’t pay cash, we don’t buy it.

Saving Up For Big And Small Purchases

Saving up enough cash to buy some things this is no big deal.  When we decided that it was time to upgrade our old 5+ year old computer that we had been nursing along for the last few years, we needed to scrape together a few hundred dollars in order to buy a new one.  We set our savings goal (about $300) and reached that goal in one month.   We did our research and found a nice refurbished Dell computer for $300.  The computer was much faster and less frustrating to use than our old one.  Done deal, and we paid cash.  We declined to finance our $300 purchase using Dell’s “easy monthly payments”.  The computer just runs so much nicer knowing that it’s paid for!

Some things require a bit more discipline in order to save for them.  For example, we paid cash for my new car that I purchased last October.   The car we bought was a nice 2  year old used car (we’ll probably never buy a new car, even with all the rebates and tax credits available today).  The car was just under $10,000, so saving up for this purchase took a bit longer.

A while back when we knew we would need a new car within a couple of years, we started saving for that purchase.  Using a plan similar to Dave Ramsey’s “Drive Free Cars And Retire Rich” plan, we set a goal for  new car within 3-4 years, and started saving towards that goal.  Instead of making a car payment (since we didn’t have one on our old car either) we just started paying ourselves a monthly car payment, and over a couple of years we had saved up enough money to buy a nice used car.

My car ended up dying before it’s time last October, so we didn’t quite reach our complete savings goal, but in the end we found an extremely nice used car for the amount that we had saved.  The car had under 30,000 miles,  and cost us less than $10,000.    We probably would have spent more, but now I’m glad we didn’t because I absolutely love my car now!

The best part is, my car is paid for.  The car is a beauty, and when people ask me how much my monthly car payments are on my nice new car, I tell them, “What payments?  We paid cash for this car!” .  We get some quizzical looks, because paying cash for a car (or other big purchases) just isn’t normal these days.  Taking on debt of all kinds IS normal.

I’ll tell you what, I may not be normal, but I don’t care to be.  And my paid for car?  It drives so much nicer without a monthly payment.

Have you ever tried paying cash for the things you buy, instead of financing them?  Did it change how you viewed that purchase, and did you get more enjoyment out of it? Do you find that you spend less when you pay cash – since the purchase is that much more real?

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Last Edited: 22nd May 2012

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  1. says

    Peter, my wife and I take the same approach as you do in avoiding buying anything on credit. We are debt-free except our mortgage which we should have paid off in the next 5 years. We accomplished this while making a normal, middle-class income. My wife is a stay-at-home mother and has been for over 8 years. I say all this not to brag, but to point out to people that it is 100% possible and realistic.

    We are frugal, but not cheap. We have nice things, take vacations and go out to eat. However, we do these things in moderation and we plan our finances carefully.

    As an example, we are saving to pay cash for a new car as you did. It will probably take us another year or two, but I know our new vehicle will drive and ride better because we will own it without having to make payments!

    Thanks for the great article and for the link! I hope more people learn to live as you do.

    Jeff@MySuperChargedLifes last blog post..Can I Make Extra Money Selling Digital Photographs Online?

  2. says

    The Wife and I did this with our last vacation. We set up an ING vacation fund – each putting 20 bucks in it, and boom we had enough for a great trip to Newport, RI. We ate, drank and stayed with the money that was in the fund. Any money we didn’t use – went back in the fund for the next trip!

    My Journeys last blog post..Cancellation of Debt May be Taxable Income

  3. says

    Peter, precisely the way you phrased this is why i have almost all but ruled out the new car idea. It will feel so great to purchase a vehicle with the cash i have on hand (and hopefully have plenty left over to put towards my next car).

    Down the line when i get to those really big things, i will be curious to see if my behavior changes because i can buy it with cash (if i spend less because it impacts my net worth, or if i spend more because i know that i have it and won’t push me into debt).

    Brians last blog post..You Don’t Need an Emergency Fund

  4. Sulana says

    I totally agree that buying with cash is so much better! I currently have $9,000 in credit card debt (to be paid off next year if I stick with my current payment plan), but I really needed a washer and dryer. I was traveling 20+ miles to the nearest laundromat and spending $10 a week there. I started saving out of each paycheck for the best deal on washers and dryers I could find. The units I wanted from Best Buy went on sale the week before Memorial Day for the cheapest I’d seen them in a year, so I took my cash in to get them. Know what that cash did for me? I was $50 short and they knocked $50 off the price plus gave me free home delivery and hook up! Now, I can throw the money I saved up for those at the debt, plus the $10 weekly saved from the laundromat, plus the saved gas money!

    I LOVE my machines and grin every load I run, knowing that they are 100% paid for and I didn’t add to my debt to get them.

  5. David L.Brown says

    I just started by 30 month program to get out of “Debt”….this July 31st,2009 I will have paid off a Lowe’s Account which was $2044.00
    My 30 month program started on June 25th, 2009, my goal is to pay off my Sears premier account by the end of this year…12-31-09

    Also I will have Wells Fargo paid off too by the end of this year…

    Starting next year 2010 take 3/4 of my Income Tax Refund…apply it to my Sears MasterCard….and I will have that paid off by April 2010
    then it is on to the final credit card….Visa…that card will be paid off by the end of the year 2010….so as you can see, I have already projected against myself…I am planning for a 30 month program, but I am in “real time” expecting to get all of these credit card accounts, paid off by the end of the year 2010…and then I will take a big bite out of each of my car payments….which are $530.00 per month…because I am going to double up on those payments and have the pontiac grand prix 2005 model June of 2011 so I will have paid off all of my credit cards, and the car too….by June of 2011

    And I owe my “living debt free” to my Lord and Savior Jesus Christ…
    and I will also be able to breathe and sleep better too…

    Being “debt free” that just sounds so wonderful too me!!!
    My health and my attitude will be more in line with my future goals…

  6. says

    Peter,
    Great post. Saving up and paying cash is so simple and yet so rare. A benefit I discovered when I paid cash for my most recent car (this is the first time I ever bought one with cash) is that I was MUCH more selective knowing that the money was coming out of my account instead of from a loan.
    Joe Plemon´s last blog ..10 Tips on How to Graduate College Debt Free

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