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5

Life After Debt: The Joy of Buying Properly

1986 Yamaha Maxim 700

I bought a motorcycle! It’s very much like that one, above! (The back seat is different, otherwise it’s the same bike, paint, everything :D).

After having saved and saved for so long, I finally bought a bike and I’m terribly excited So far I’ve ridden it about 80 miles in the last week, and none of that has been “joy riding!” I had to get the bike from the point of sale to my apartment, which was about 20 miles, and then to Sean’s and back for the weekend, which is another 50 miles - plus I did a little riding for errands in the middle.

I have been planning to get a motorcycle since 2006, but at the time when I decided I wanted one I was deep into debt and had no real idea when I’d be able to get one. Now, two years later, there’s a beautiful maroon/red/purple 1986 Yamaha Maxim 700 sitting in my parking space and I’m pleased as punch.

What I’ve been thinking about today is how glad I am that I learned to do this whole buying this properly. Whereas a few years ago I would have financed the bike from a dealership, today I bought the bike with cash after having saved up. There are a lot of benefits to saving and THEN buying - as opposed to the reverse buy-it-immediately-and-THEN-pay process that we’re all so used to (and hopefully now running away from!).

Time

Clock Although it is eternally frustrating to save up and save up, to wait to buy the thing you want, letting time pass before buying is actually a good thing. Many personal finance bloggers have written before about their “buying rules,” which have time restraints built into their budgeting and saving. So for example, when considering buying something that costs $100, they impose a mandatory two-week waiting period before buying. Or if the desired object is, say, $1000, they may mandate months of wait time - to allow themselves mulling time before taking the plunge.

I personally don’t set restrictions on buying anything, I only must have saved up for the thing before I buy it - whatever it is. I don’t have only one savings account, which helps matters. If something costs $1000, I’m not going to pull it out of my “long-term” savings or any of my investments, and I budget my checking to $0… so to buy something for $1000, I have to save $1000. Inadvertently, I have a waiting period for every larger purchase I make because I have to take time to save - and the more I have to save, the more I have to wait.

I budgeted $3500 total for motorcycle and gear, and it’s taken me about two months to save that up (accelerated by the economic stimulus check in May). During those two months I’ve taken time to really learn about the bike that I want, and done my research properly. That time has been priceless; I’ve gone back and forth between wanting to buy a bike and not wanting to, and have been indecisive about which bike to buy after I finally decided I really did want one after all.

The time has been invaluable, because it made me do the thing right - I was prepared, well-researched, and ready, with cash-in-hand and the confidence to walk away if the price or bike wasn’t right.

Money

Coins Besides the time I had in having to save up for the purchase, by buying with cash I avoided any sort of debt whatsoever. Debt is a heavy burden, emotionally and financially. Speaking just about the money here, I can tell you that paying for something with cash changes the whole deal.

For one thing, there are no finance charges - obviously - which is a glorious thing. My bike cost what I paid for it, nothing more. On any loan, even with a “good” interest rate, I would have paid well over the value of the bike in interest by the time I got the title free and clear. Instead, by paying with cash, the title is mine and the bike is paid for. Not only is it less fuss, it’s just less expensive. Paying interest is not a direction your money should be going, especially when it’s to buy something you could have saved up for otherwise.

Paying with cash also makes you more careful with your money. I know for a fact that a few years ago, had I decided to get a loan (and had I qualified) for a motorcycle, I would have bought I bike for more like $6000 than the $1800 I ended up spending. It’s a lot easier to spend money on paper than it is to actually spend money. Buying on loan, it’s easy to think only of the $250 monthly payments and forget that, in fact, you’re spending $6k plus interest on the thing.

And finally, along with the time factor, in saving for something, you have the opportunity to really shop. You can price-compare and bargain-hunt your heart out, and when the time comes to buy you’ll have all your ducks in a row. I had originally budgeted $3500 for a motorcycle and gear, but through my frugality and the time I had to look around, I ended up spending only $2360. I am going to get a thorough maintenance on the bike performed, which will cost me about $150, but because I spent so much less than my “max savings,” I have that sort of financial leeway. I bought my gear on sale and got a bike in excellent condition at Kelly Blue Book price (below by $40, actually). The time I took to save allowed me to find deals I wouldn’t have found otherwise.

Security and Freedom

Finally, I feel - and I know a lot of other people are with me on this - that it is much more secure, much more solid to buy things with cash. This is my first larger purchase since getting out of debt, and I can’t tell you how liberating it is to buy something… and have that be the end. There are no finance charges, no further payments to think about… there’s no worry that I may lose my job and not be able to afford the payments.

I also feel incredibly secure. The bike is mine - there is no debating; it’s not 20% mine and 80% the bank’s. I also feel more attached to the bike than I have any other larger thing I’ve bought because I handed over a fat envelope of dollars to get it in my possession, an experience not lightly forgotten. And though my “fun money” savings account is now dreadfully low, I know that the money taken out of it has been replaced by a thing I can see, feel, and use.

It’s a rather large, loud, shiny thing with a lot of excitement behind it… but that’s another topic. I couldn’t be more pleased - and my experience buying the motorcycle with cash has taught me that it’s the only way I will every buy.

Photos, in order (excluding the motorcycle photo) are by chrisvick, pfala, and llima. Thank you for sharing your art!

Filed Under Frugal Living, Snowflaking Debt and Savings, money and finance

Comments

12 Responses to “Life After Debt: The Joy of Buying Properly”

My Daily Dollars on August 6th, 2008 7:11 am

Congratulations! Good for you. . . looks like you got a great deal. You’re so right, the emotional benefit of paying cash for something you can afford is huge! I know that part of what made my wedding lovely is knowing that it is all paid for — free and clear!
Frugalchick on August 6th, 2008 12:37 pm

Congratulations! The bike looks awesome.
Jennifer on August 22nd, 2008 11:19 am

Congratulations on your cash purchase as well as becoming debt free! I used to read your blog then got a bit distracted from finances and just got back on track. Glad to see you have paid off all your debts during that time.

I can’t wait to join you in debt free status.
Sara - pension comparison on August 23rd, 2008 10:12 am

Love the bike, sounds like you scored a good deal!
Alisa on August 27th, 2008 7:35 am

Cool!

Congratulations and thank you for the inspiration to save for the purchase. I like it and I am going to do it. The only slight modification that I think I will make is after saving for the purchase, I will buy it with a credit card and used the saved money to pay off the card. This way I am also boosting the credit score.

I attended this event that spoke about our nation’s debt problem. You may find it interesting. I summarized it here:

http://www.ourstockmarketjourney.blogspot.com/

With what I have read on your blog so far; you are way ahead of the debt reducing initiative. Keep up the great work!

Be well.
Jim Talkington on September 5th, 2008 5:05 am

This is a wonderful blog, Shanti, just what I’ve been looking for in my desire to simplify. And congratulations on the motorcycle, as a lifelong motorcyclist it’s great to see you join the club!
shanti on September 5th, 2008 12:31 pm

Thanks, Jim!

I adore my bike. I went on vacation two weeks ago and hadn’t ridden since. When I went to ride yesterday there was ABSOLUTELY NO TENSION on the clutch lever. None, whatsoever. I fear that the clutch has snapped or the springs are not working properly or something. What’s worse, I can’t get the bike out of first gear to move it. What does one do in this situation?!

I wonder if there’s a motorcycle mechanic locally who does house calls?
Blake on September 10th, 2008 5:53 am

Congrats on the bike (but I hope you’re able to get it fixed fairly easily!)

When you’re saving for a specific purpose like this, do you have a savings account specifically for it? I’ve been using ING Direct for about a year now, and I absolutely love how easy it is to open different accounts for different purposes. I have accounts ranging from long-term savings to a snowboard fund. It really makes it easy.
shanti on September 10th, 2008 2:37 pm

Hi Blake -
Thank you! I’ll get the bike sorted out - first I need to find TIME But not being able to ride my bike really sucks.

I have three “savings” accounts - I have a high-yield savings account with ETrade (which I think I may switch to ING or WaMu because so many people love them) where I put my emergency fund savings (I can withdraw at any time). I then have an IRA where I deposit money regularly (retirement savings).

I also have a savings account attached to my checking account which I use for all “interim” savings - just a normal savings account that gets my “keep the change” dollars, as well as the remainders of all my paychecks after the money’s been budgeted out.

When I save money for a bigger purchases I just save in my bank savings account. If I were saving for more than, say, four months, I would save up in a high-yield savings account - but usually it only takes me a month or two to save up for the thing I’m getting, which makes the 3-5% interest sort of moot for the purpose.
Sara on September 28th, 2008 12:58 am

That is the first I have seen of your bike. It’s so pretty!
shanti on September 28th, 2008 1:02 am

Thanks, Sara! I love it. I wish I could make it all better NOW! The clutch is now fixed but there’s so much more to do
<33
Jay Z on August 19th, 2009 8:03 am

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