Don’t Forget the Hidden Costs!

Have you ever bought something that you saved up so long for, and found that you couldn’t afford having it months later? It sucks. My friend recently bought a 6-month old, full bred male golden retreiver…if you know anything about full bred puppies, they cost an arm and a leg. He saved up for 7 months and got his $1,400.00 to buy it. Little did he know he was in for a surprise. He loved the puppy, but guess what happened? Yes, he ran out of money. He never really thought of the costs of food, pee pads, a collar and leash, brush, obedience school, license, time taken from other activities, and a whole lot more. He soon became broke after a few short months. Luckily, he was saved by his parents who received the liability of paying for all that (poor guys), and if it wasn’t for them I don’t know what would’ve happen.

That’s a great (yet sad) example of how not allocating hidden costs will ruin you financially, and this is only on a small scale! Think of those people who buy things everyday yet do not allocate for how much it will not benefit them in the future. Let’s take a look at another example.

I have a 21 year old friend who recently bought a BMW 5-Series (530 to be exact). He currently works at a karaoke joint making 15/hr. The car costed him $50,000, he put 10% down, and he currently pays 500/month. He’s been paying this for 3 months. He then bought 20-inch Beyern rims which he now pays for at 100/month. Add this all up. $5,000 Down payment + $6000/year in installments + $1200/year for rims = $12,200 in payments for the first year, and $7,200/year after that…for the car ALONE. Guess what he forgot about? Maintenance. Tires, Oil Changes, Wheel alignment and wheel balance, brakes, radiator fluid, transmission fluid, gasoline, possibility of an accident, and sooo much more. He basically bought a $100,000 car that he’s slowly paying for. His little $18,000/year job doesn’t help much does it? He can barely eat! What if he wasn’t living in his parents house?

Remeber, if you are going to purchase any tangible good, please don’t forget all the factors mentioned. When I buy something, I always double the cost of the good in my head to allocate for all these costs. If a cell phone was going to cost me $100.00 I would think $200.00 because of games, internet, going over minutes or text, etc., and that doesn’t even include the plan.

If you are a young guy like me, don’t go out a buy the finer things in life. Stop it with that champagne taste you have when you only have a beer budget. If you can’t afford it, don’t buy it to show off. Pretty soon people will forget about it, the item will depreciate, and you’ll be stuck paying for a good you don’t even want anymore. Spend your money wisely, and don’t forget to consider these expenses.

Explore posts in the same categories: Financial Success

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