You might be asking yourself, why write about total price vs monthly payment, the answer is self-explanatory. On the surface this may appear to be true, but there are underlying components that play into this way of thinking as well. In this blog we are going to spend some time breaking these two items down. Let’s get started.
Monthly Payment:
Monthly payment is something we see on many items now, right next to the total cost. How many of you pick up on how often these words come up when we talk to a sales representative about an expensive item. These words come up for vehicles, furniture, tv’s, and cell phones just to name a few. Have you ever stopped to think about why? The reason this is done is to take our minds off the larger and often more scary number and focus on the smaller more desired amount. Large numbers are tough to stomach when parting with our hard earned money. What isn’t mentioned during these discussions though is how much extra we will pay in interest to either their store or the lending firms. Depending on the interest rate and how much the item is can add anywhere from several hundred to several thousand dollars to the item. Having the monthly payment mindset keeps us on the paycheck to paycheck mindset. We think, will this monthly payment fit into my monthly pay. We tend to stay in debt longer and just come to terms with “this is just the way it always will be” kind of thinking. This isn’t the right way to think! God never once desired us to live a life full of debt! This is all society driven by getting us to think we need everything right away. When you focus on the here and now instead of your long term plan it keeps you constantly broke and in debt.
Total Cost:
The total cost mindset takes into consideration the final total. The final total can be looked at two ways:
- Monthly payments + Interest = Total Cost
- Sticker / List price (Paying cash)
Either way is looking at the big picture, but the second option is the better choice between the two of them. The total cost mindset gets you to look up and away from the here and now to focus on long term cost of the item. The other aspect this brings into the picture is the time to gain knowledge about the product. Doing a research prior so you know where the best deal can be found and also the total cost range. Having this knowledge gives you power. Power to say no today, knowing you will get it in the future. In our recent blog we called this type of fund the Future Use fund or FU fund for short. Take back your power today by shifting your thoughts away from monthly payment to total cost. You will not only experience a shift in your buying tendencies, you will also notice improvements in other areas of your life.
We would love to hear your stories! Comment below or send us an email, it’s your stories that drive our blog topics.
Follow us on Facebook: @crossroadzcoach
Crossroadz Coach
“Changing your tomorrow starts TODAY!”
Crossroads Financial Coaching LLC