Published On: Sun, Jul 10th, 2016

Savings ToolKit Breakdown- How I Pay Cash for Large Purchases

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How-I-Pay-Cash-for-Large-PurchasesSince we paid off all our debt in 2013, we’ve been fortunate enough to pay cash for a number of large purchases (we were even able to do this while getting out of debt.)

Here’s a list of things we paid for in cash over the past 5-6 years:

  • Two cars
  • Two long vacations and 4-5 smaller ones at about $12,000+ (We spent six weeks in California and almost three week in the Dominican Republic recently.)
  • Private school tuition $28,000
  • Home renovations $15,000
  • Business start-up $3,000

Then, we’ve just lived life without debt. That’s a big number as well. We don’t finance things like groceries, entertainment, etc. We just live on cash and avoid debt at all costs. If you are looking to save for a house, car, college education or any other big-ticket items these are some must haves in your savings toolkit.

Online Savings Account

This is my primary go-to for saving. We set up an amount of money to go to our online savings automatically from each paycheck. There, it’s more difficult to access because I can’t go to a physical location easily or pull it out of the ATM. (I opt for no debit card.) Sometimes things feel really tight when we do this. But then I remember we only feel poor. We aren’t actually poor! We are just living below our means in order to save up for a big purchase, business opportunity or rainy day. I like CapitalOne 360 and Ally Bank for online savings. Right now, if you sign up for the CapitalOne 360 savings account, you get a $20 referral fee up to $1,000 for friends and family that sign up! Click here to open an online savings account with them.

digit-logo-branded.f49fc955_300Savings App

I am a big fan of Digit because it sneaks small amounts of money out of your checking account and into an FDIC-insured savings account not connected to any debit, checkbook or other tool that can get you easy access to the money. You get it out with simple text commands from your phone. It’s like swiping for a latte or a bag of chips and they guarantee you will never be overdrawn because of Digit withdrawals. So far so good for me! Recently, I used Digit to give $500 to my youngest child so that she could buy stocks for her birthday. You can set it to take small random amounts or larger specific amounts from your primary checking based on your savings goal. You don’t want this balance to get too big, or else you are not getting the interest income you should. After it gets over $400 or $500, I transfer it to a savings account or stock brokerage. You also get a $5 referral bonus each time you refer someone! I’ve made $50 off this feature alone! Sign up here to get going on this easy-peasy way to save.

Discount Brokerage Account

I’m not an investing genius by any means, but this another GREAT GREAT GREAT method of saving for large purchases.I do realize that my money can actually work harder than I can. Imagine, in a savings account, you might be making .99% interest or less. But when you invest your money, the numbers can start at 3% and go up to 12% or more! I use TradeKing to get positions in stocks that I believe will grow over the next 3-5 years. Don’t put money here if you need it before the 3-5 year timeline. This is a great tool for saving for things like an epic vacation, home, car, college tuition or just about anything that might cost a lot of money. Opening an account with TradeKing is free. I just do an auto transfer from our online savings every two weeks then buy stocks every 3 months or so. Click here to open your brokerage account for free.

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Aja McClanahan

Aja “A.J.” McClanahan is a writer, speaker and entrepreneur.

Source: Principles of Increase

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About the Author

- CRM and database administration for sales & marketing organizations or departments. My clients have included mainly small businesses and non profit organizations. Specialties: technology & sales consulting, CRM deployment,, content management, brand development, general sales & marketing, social media and interactive marketing.

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Did you know?

African Americans are significantly more likely to have some type of debt (94%) compared with the general population (82%). Credit card debt, student loan debt, and personal loans are all significantly higher in the African American community.

Source: Prudential’s 2013 "African American Financial Experience" study