Spending money on expensive things you don’t need is a surefire way to deplete your bank account and reduce your net worth.
Many large purchases are made on a whim or represent a lack of judgment.
If you can really afford an expensive status symbol, go for it. However, if you want to get the most bang for your buck, there are plenty of expensive items you can and should do without.
Here are several examples of big expenses you shouldn’t make.
Unless you know exactly what you’re getting into, you should avoid the hassle of buying a timeshare vacation home.
A timeshare property has divided ownership or use rights.
These days, timeshares usually take the form of vacation interval plans. These arrangements entitle “owners” to points that they can redeem for stays at various properties, but generally require owners to pay ongoing property maintenance fees that can cost hundreds or thousands of dollars per year.
Perhaps unsurprisingly, it tends to be much more difficult to sell a timeshare than to buy one. As Money Talks News founder Stacy Johnson notes in “Is Buying a Timeshare Already a Good Idea?” :
“I would bet timeshare is the source of more questions I’ve received over the years than any other. I can’t count the number of emails I’ve received from desperate owners looking to unload. »
2. Recreational Vehicles
The idea of taking a vacation in a house on wheels might sound enticing, but think about what you’ll be doing with an RV once the trip is over. How often will you use it?
Some communities have laws against parking recreational vehicles on streets or in driveways for extended periods of time. If you have to rent storage space for your RV when you’re not using it, you’ll have an ongoing expense, plus inevitable ongoing costs like gas and maintenance.
Unless you plan to do a lot of highway travel, renting an RV is probably more practical.
Services like RVShare allows you to rent an RV directly from its owner. And it’s possible to rent one from an RV company for as little as $1 a day if you have enough flexibility in your vacation plans to take advantage of what are known as relocation deals. .
3. New cars
New cars start to lose value the moment you pull them out of a dealership lot. Typically, they depreciate by 20% within the first 12 months of ownership, according to Carfaxwhich records automobile histories.
If you buy a used car, you let someone else absorb the loss of the initial depreciation.
4. Branded clothing
When you spend big bucks on designer clothes, you’re paying for the brand name and bragging rights that come with wearing something exclusive. You are probably also trying to impress others.
When fashions change, your designer clothes will likely gather dust in your closet. It makes more sense to buy quality clothes at reasonable prices and invest the money you save.
As Stacy notes in “The 10 Golden Rules to Becoming a Millionaire”:
“Diverting your investable money into things like cars, clothes, vacations, and homes that you can’t afford will make you look rich now, but keep you from actually getting rich later.”
5. The latest technology
Tech companies depend on the public’s appetite for new devices to fuel their sales. After all, it’s fun to have the latest gadget. But if you wait a bit, you can usually buy the same item at a discount.
So, before making a purchase, you should ask yourself if you think the smartphone, tablet or laptop is obsolete just because a new model is available.
It doesn’t make sense to buy a new version of a gadget you already own unless there’s improved functionality, says Eric Tysonauthor of “Personal Finance For Dummies”.
“People who get caught up in cutting-edge technology get it into their heads that they need a specific model,” he told Money Talks News. “Do you really get what you pay for? »
6. Toys for adults
You can spend a bundle on adult toys that end up sitting in your garage for long periods of time. Snowmobiles, jet skis, and all-terrain vehicles can be fun, but they require big cash outlays. They may also require periodic maintenance by a mechanic.
If you rarely use them, your money will be wasted. So before you make a purchase, be honest with yourself about what you’ll be using the items for, Tyson suggests.
“It’s important for people to think about how often they’re going to use things like this,” he says.
7. Watches that are expensive
Because you can buy a reliable watch inexpensively, there is no need to buy an expensive wristwatch.
“For well under $50, you can get a watch that keeps time perfectly,” says Tyson.
If you decide to pay hundreds or thousands of dollars for a high-end watch, you’ll probably buy it for the prestige.
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