A new house
If the costs for a new car add up to your monthly bill, imagine what a new house can do to your finances. Real estate companies are doing everything in their power to lure new buyers, especially during a recession when money is tight. Even though prices have been lowered, buying a new house right now is still a risky business.
“You need a job in order to get a mortgage, and you may have a good one that you feel is recession-proof, but you never know,” says Jack Choros, finance writer with CPI Inflation Calculator. “During these times, banks and governments can also institute many different kinds of loan programs and stimulus packages that may send rates up and down unpredictably.”
A mortgage refinance can also be an uncertain endeavor, although mortgage rates are currently at an all-time low. According to Bonebright, “you’ll have to pay closing costs, which can be substantial. And if you plan to use cash-out refinancing to pay debts, be sure you’re not going to rack up more debts after you’ve refinanced.”
Read also 10 Unexpected Things That Decrease Your Property Value.
A new phone
The coronavirus pandemic made us aware of many things we used to take for granted. It has taught us many lessons, among which the importance of staying connected. Fortunately, we were able to do that with the help of mobile phones, tablets, computers etc. However, the need to stay connected does not warrant you to go out and by yourself the latest phone model and waste $1,000 just like that.
If your phone can handle Skype calls and Facetime video chats, there’s no point in getting a new one at this point. “At first, (upgrading) may seem like a great idea because we all rely on our phones to get work done, research, and communicate,” says Drew Cheneler of Simple Money Lyfe. “But this is not a smart money move during a recession. You are better off keeping your old phone and investing the money or putting it into an emergency fund.”
Related: Cut These 11 Unnecessary Expenses and Save Money During the Coronavirus Crisis
Anything else you might need money for
Cars and houses are not the only things you need big bucks for. There are other costly items you might want, or worse, need, like a new deck, a new sofa or a new TV, which might require extra financial resources. But again, this is not the best time.
“It’s a good idea to steer clear of any big purchase that requires you to commit to ongoing payments or deplete your cash reserves, even if it seems as though you’re getting a great deal.” Hamilton recommends. “This could be anything from a cheap used car to bargain furniture offered with cheap financing. These deals can seem tempting when stores are desperate to get customers in, but having cash in the bank in case the recession impacts your income is far more valuable than any bargain.”
