When shopping for products, people often fall for the upsell and overbuy. Overbuying is when someone buys a premium version of a basic product that they may need. They pay a lot more money for a fancier or better version of the product. Lots of people overbuy when shopping for homes, cars, furniture, electronics, and other items. It’s simply not possible to live a frugal existence and overbuy at the same time. Below are a few of the ways that people overbuy and how not to fall prey to it.
Buying a car
A car can be deemed a necessary purchase depending upon where you live. Automobiles are often necessary for getting to and from work, running errands, and for getting from point A to point B. Many car shoppers would be better served by buying a practical fuel efficient automobile that meets their needs and the needs of their families. This thought often changes however when car shoppers hit the showroom floor.
They often buy too much car for too many dollars. This is called overbuying. Overbuying will make a person buy a car that is a whole lot flashier and more expensive than their budget can afford. The result is much higher monthly payments and longer loan terms than the purchaser ever wanted. Avoid overbuying by sticking to your car buying shopping list.
Buying a house
The recent housing crisis can be partially blamed on consumers overbuying homes. Many home owners bought way too much house than their finances could afford. As a result, they were stuck with massive mortgage payments due month after month. This caused many home buyers to fall behind on their loans and subsequently lose their houses to foreclosure.
Living frugally requires a person to be honest about what is absolutely necessary and what is not necessary. Finding a place to live is a legitimate need whereas buying a McMansion is not. A basic attractive looking home that meets the needs of the home buyer is more than enough. Keep your monthly payments in line with what you can afford.
Buying furniture and appliances
The biggest mistake that new homeowners make after purchasing a home is going heavily into debt to finance their purchases. They feel a need to furnish the entire house at one time. They max out all of their credit card to purchase living room, bedroom, and dining room sets. The homeowners quickly find themselves trying to make mortgage payments while repaying high interest credit card debt at the same time.
New homeowners can avoid overbuying by paying for furniture and appliances in full. The entire house does not have to be furnished at one time. You can attack one area at a time and use cash to furnish it. This may take longer but the entire house will be furnished debt free.
Avoiding overbuying requires having a plan and being perfectly clear about what can and what cannot be afforded. It’s important to stick to spending limits and defer making budget busting purchases.
So, what are you going to do to avoid the overbuying trap?
when I bought my car they tried really hard for the upsell “get the bigger tires, lots of people like those” “Oh, what you dont want a cd player” (me, no, I dont, I have not purchased a cd since 98).
I was able to avoid all that and ended up with 0 power locks or windows. Wouldnt change it for the world, cause If I had, i’d be paying a lot more!
@ Jeff Good for you for staying strong in your conviction to not overbuy. So many people break down at this point because they feel like they are causing a confrontation and would prefer to avoid that. Because you held your ground you are much better off financially.
I had to laugh when you said you haven’t bought a CD since 98. I think I am the same. I love MP3’s. They take no physical space and I can buy a transmitter for my car for $10…way cheaper than a fancy car stereo.
First step, resist the temptation! Second step, resist the temptation! Third step, resist the temptation! By now, you notice the pattern. I refuse to go into debt for these things. There are obvious exceptions like a house and perhaps a car, although I have not bought a car in 14/16 years.
@ Krant Cents Good for you. Not many people have a mantra that actually works for them. Congrats on not buying a car in the last decade. That’s awesome.
This was quite original! In fact, I never looked at things this way. Fortunately, I don’t have this affliction. In fact, I’m an expert “underbuyer” :). This one’s going in my next round up!
when I bought my car they tried really hard for the upsell “get the bigger tires, lots of people like those” “Oh, what you dont want a cd player” (me, no, I dont, I have not purchased a cd since 98).
I was able to avoid all that and ended up with 0 power locks or windows. Wouldnt change it for the world, cause If I had, i’d be paying a lot more!
@ Jeff Good for you for staying strong in your conviction to not overbuy. So many people break down at this point because they feel like they are causing a confrontation and would prefer to avoid that. Because you held your ground you are much better off financially.
I had to laugh when you said you haven’t bought a CD since 98. I think I am the same. I love MP3’s. They take no physical space and I can buy a transmitter for my car for $10…way cheaper than a fancy car stereo.
First step, resist the temptation! Second step, resist the temptation! Third step, resist the temptation! By now, you notice the pattern. I refuse to go into debt for these things. There are obvious exceptions like a house and perhaps a car, although I have not bought a car in 14/16 years.
@ Krant Cents Good for you. Not many people have a mantra that actually works for them. Congrats on not buying a car in the last decade. That’s awesome.
This was quite original! In fact, I never looked at things this way. Fortunately, I don’t have this affliction. In fact, I’m an expert “underbuyer” :). This one’s going in my next round up!
@ Barbara Thanks for including in your round up. I like that word “underbuyer”, that is great. I am going to have to use that one in a future post.