Pay less now, or pay more later, your choice

There are lots of ways to spend more money than you have to.

One of the easiest ways to do that is to buy something before you have the money for it. And there are oodles of ways to do this.

The most obvious one is the credit card. You can buy pretty much anything today, right now. I’ve had credit cards with over $25,000 in credit limit. I could go buy a new car before the day was out.

You can do all this, of course, because the companies that actually pay when you buy it (the credit card companies) are banking that you will not pay the balance off quickly, and will incur finance charges, potentially over many months and years. They make lots of money on this.

There are retail stores that do something similar. You see this in the phrases “rent-to-own”, or “90 days same as cash”. What they mean is that you can take home the item right now, and then pay a certain amount each month until it’s paid off, or not pay anything for a period of time.

That last case is particularly dangerous, because if you don’t pay for the item in full in the allotted period, you can be charged all the interest you weren’t charged originally. Yikes.

These types of situations can all be avoided. You just need to pay for things when you buy them. (This means not using credit cards for everyday spending. And yes, I know this means you’ll earn fewer points. You’ll be fine. Earn points other ways.)

But there’s another way to spend more money than you have to. It involves not being prepared.

Doing it right the first time

There’s an annoying phrase that I learned back when I worked in retail. Roughly, it goes:

“If you don’t have time to do it right, how will you have time to do it again?”

What this means, effectively, is that rushing and cutting corners in a job in order to save time is ultimately self-defeating, as you will more likely have to go back and redo the work.

(Personally I always found this phrase patronizing, and up there with workplace efficiency apothegms like “if you have time to lean, you have time to clean“, but maybe that’s beside the point.)

The takeaway here is that if you do something right the first time, you won’t likely need to do it a second time. Planning, as always, is key.

Ways to save money

All of this has a financial component to it too.

So here are some other ways that planning can help you save money.

• Having an emergency fund. Emergencies are the worst time to take on new debt. Once the emergency ends, what then? That debt isn’t going to go away. You need cash in an emergency.
• Having proper insurance. It doesn’t matter whether it’s car, renters, flood, or any of the others. If you don’t have it and you need it, the amount you will pay is much greater than what you would have paid had you been prepared.
• Think preparedness. What would be particularly expensive to you to fix or replace in the event of loss, theft, misuse, disasters, etc. What is so important that you would spent a large amount of money to save or recover? I’ll leave this one to you.

None of this stuff is particularly exciting or fun. “Ooooh, flood insurance!” is not something anyone ever says.

But then, maybe they do, when they’re knee deep in water in their living room.

But that never happens, right?

Again, think preparedness. A little time, work, and money now could save you a lot of money later. You’ll wish you did. No time for leaning yet.

But enough about me. How are you prepared for the unexpected? (Or are you not prepared?)