Setting Financial Goals
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Consider Goals in Planning for a Major Purchase

If a major purchase is in your future, both your finances and your peace of mind will benefit from advance planning. A few basic principles apply across the board (e.g., begin saving as far ahead as possible and always look for the best deal), but every instance carries a different set of considerations that can help you make the most of your decision to spend.

Here are some common major purchases and relevant tips for getting the best deals:

Automobile

  • Consider a low-mileage used car rather than a new one. You can check the history of a used car you are considering, based on its Vehicle Identification Number (VIN). To find this information online, use the keyword phrase "vehicle history reports" on search engines for a listing of organizations that provide these types of reports.

  • Compare total costs for leasing versus buying before making a final decision.

  • Weigh the relative benefits of a manufacturer's rebate against special financing offers.

  • If paying cash is an option, consider the advantages of buying outright rather than financing.

  • Do not buy more than you need or can afford. Calculate monthly payments, including insurance. The Credit Union National Association provides online calculators at http://hffo.cuna.org/calculators.html?topic=housing&sub_id=17144.

New Home

  • Understand your credit rating. By paying off debt and lowering your current expenses, you may lower the rate you can get on a mortgage.

  • Know how much you can spend and determine how much you can afford. You may want to get pre-qualified for a loan before you begin actively looking for a home. Make sure you are comfortable with the payments.

  • Do not buy before you are ready. A home purchase is a significant commitment; understand the costs and implications in advance.

  • You may want to make a substantial down payment. By paying at least 20 percent of the appraised value of the property up front, you will avoid the cost of mortgage insurance, which can run from $1,000 to $5,000 per year.

  • Calculate monthly payments. Consult one of the myriad of online calculators, such as Choose to Save, at www.choosetosave.org/calculators/.

Education

  • Familiarize yourself with available programs. For example, tax breaks for education are available through state-sponsored 529 plans, Coverdell savings plans, Roth IRAs, Hope Scholarship Credits and Lifetime Learning Credits.

  • Check financial aid alternatives via FinAid online, at www.finaid.org or the "Parents and Students" section of the National Association of Student Financial Aid Administrators' Web site, www.nasfaa.org.

  • Consider an in-state, tax-supported school or community college to minimize costs.

  • Various kinds of government service can help offset the expense of college. For details, consult www.students.gov.

  • Student loans provide a low-interest option and are available through individual colleges and universities.

Vacation

  • Weigh several alternatives before deciding on a special trip. Examine seasonal deals and special offers. Consult the Internet and/or a travel agent for details. Flight and package offers are available from various travel Web sites.

  • For a once in a lifetime trip, set aside money in a special fund well in advance.

  • Based on the amount of time available, choose the option that brings the greatest return. For a description of types of accounts, consult www.americasaves.org/back_page/savings_accounts.cfm.

  • Avoid scams. Deal only with reputable organizations. Consult the Department of Transportation for information at airconsumer.ost.dot.gov/ for travel tips.

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