My Strategy for Making Large Purchases

As I’ve mentioned before, when I’m making a purchase that clocks in at above the $20 mark or so, I tend to invest some time in that purchase to make sure I’m making the right decision. I don’t want to make a purchase that isn’t going to work for me, nor a purchase that isn’t going to work well over the long run.

This process is basically the same for any significant purchase. It doesn’t matter whether it’s an item for my kitchen or an appliance or a musical instrument, I tend to go through the same process when deciding on a significant purchase.

Here are the steps that I follow.

Step One – Do I Actually Need This Item?

The first step doesn’t involve any research whatsoever. Instead, it starts off with a question I ask myself independent of any research or any outside influences.

Do I really need this thing?

Honestly, it’s a very rare situation where I need to make a significant purchase now. Those situations don’t actually come around very often and they’re usually centered around replacing a broken but crucial item. I can think of exactly once in the last year where genuine emergency pushed me into making a fast purchase.

Almost always, I have some time to consider a purchase. If it’s a new item that I haven’t owned before, I’m generally not addressing something that I need right this second. It’s something that I think I’ll have a use for, but if I don’t have it today or tomorrow, it’s not the end of the world. If it’s a replacement item, I’m usually shopping around because I’ve noticed a problem with something I use regularly where that item is going to need to be replaced soon, but I have a little bit of time to think about it.

In short, I start thinking about a purchase well before I’m going to actually make that purchase, and the first thing I think about is whether I actually need to make that purchase.

Step Two – What Features Do I Need?

If it’s an item to be replaced, I consider whether or not I actually need to continue to own this item. Is it really filling a need that isn’t filled by something else I already own? Do I use it frequently enough that I can’t just borrow it from someone on the occasion when I need one? If I decide that I do need to continue owning this item, I ask myself whether it is something I could repair myself, or something that would be a low-cost repair from a repairperson.

If I do decide to replace an item or if the item is something new, I make a list of the features I consider essential for that item. What exactly do I want this item to do? Again, I do this thinking and make this list of features without doing any research. The reason? I don’t want to be influenced by “features” that never occurred to me until some publication influenced me to want that feature. I want to stick with the features I want.

Some features that consistently pop up include reliability (this is pretty much a given if I’m replacing or upgrading an item), minimal electronic features beyond the features I’m looking for (as electronics are often a failure point in devices), and a brief list of the things I actually want to do with the item.

Let’s say, for example, that I’m about to replace our washing machine because it’s making ominous noises. I consider whether or not we actually need one and conclude that we do need one, as we have five family members that need fresh laundry. Without looking at any sort of reviews, I start making a list of features I want. I want it to be reliable. I want minimal electronic components. I want it to be able to handle a large load of clothes. I want the clothes to be well cleaned without an excessive beating. I’d like minimal water use, but this isn’t a huge deal breaker. Those are the features I actually need from a washer; the other features a washer might have are things I either don’t care about (lots of different washing programs) or actually don’t want (digital displays, wi-fi, etc.).

I can make a list of features like that without looking at a single review. In fact, I don’t want to look at washer reviews. I want to think independently about the features I want.

What if I’m buying something for the first time? In general, I want an entry-level item, possibly even a used one, but one that’s generally compatible with standards out there. That’s basically my standard for my first purchase of everything – I usually look for a decent entry-level model that’s used. My reason for using the item is often the most obvious use or two – I buy a musical instrument for the first time to learn the basics of playing it, not to have an absolutely perfect sound, for example.

Step Three – Turn to Trusted Sources

The first trusted source I turn to is people in my social network. If I personally know someone who has some significant knowledge about a particular type of item, I’ll ask that person before looking anywhere else. I’ll explain what I’m looking to buy, what features I want, and maybe what features I don’t want, and ask for their opinion.

I do this for two reasons. One, there’s often a level of back and forth and understanding of my particular needs that a person can understand but a written review cannot. I can’t describe my usage and my needs to a magazine article, for example. Two, talking to actual people often points me to bargains and suggestions that I would have never found from simply researching the item.

In the past, simply because I asked a few questions of people who know what they’re talking about in my life, I’ve wound up with free small appliances, free musical instruments, huge discounts on larger appliances, and many other benefits.

If I don’t have a trusted source in my personal social network or those sources don’t really point me to a good solution, I turn to a very small group of trusted professional sources, the first of which is Consumer Reports. They have coverage of a wide range of consumer goods and, most of the time, their “best buy” options and reliability ratings point me directly toward a great option.

If I can’t find a Consumer Reports article, I usually look at a bunch of sources and try to find some consensus viewpoints among all of them. What models tend to show up frequently in lots of reviews as an example of a reliable one that has the features I’m looking for?

My goal is to identify two or three models that match up with that list of necessary features I made earlier. I tend to ignore features that go above and beyond what’s necessary, which usually cuts off expensive high end models for most purchases.

Step Four – Wait

If I’ve made the decision to buy an expensive item and it’s not an urgent purchase, I give myself a waiting period to make sure that it’s not just an impulsive thing. Typically, my waiting period is one month.

During that month, I do keep an eye out for huge bargains on the item, but I usually just sit in a holding pattern, giving myself time to decide not to buy.

Step Five – Buy

If a month has passed and I’m still convinced the purchase is a good idea, I move forward and start seriously looking for the item.

If this is a new item for me and not an upgrade or replacement, I start looking at secondhand shops and Craigslist and other sources for used items. There’s really no need to go pay a “new item” price for something like a bread machine or a banjo or something else I might want to try out or learn how to use. If I’m buying used, I’m not worried about getting the best item that nails all of my desired features. Rather, I want something functional at a very low price that I can use for learning purposes, so that I can upgrade it later if it becomes an essential part of my life or get rid of it with minimal financial loss if it doesn’t.

Often, when yard sale season rolls around in the spring, I have a short list of these kinds of items that I’m looking for. For example, if I see a banjo at a yard sale this spring, for example, I’ll probably pick one up.

If this is an upgrade or replacement, I’ve usually settled on two or three specific models and I vigorously price-hunt for those models. I’ll look at lots of retailers, both brick and mortar retailers and online retailers, and try to find the best prices I can on the models I’m considering. In this scenario, I usually don’t pull the trigger instantly; I give it a few weeks to see if any sales pop up. Often, I’ll add the item to an online cart but not buy it, which will sometimes cause a price drop or an email from the retailer offering an additional discount.

I’ll give it a few weeks and make sure I’ve budgeted for that amount, and then I’ll pull the trigger, usually during a period when I think I’ll have adequate time to actually learn how to use the item well. If I’m in a busy period in life, I’ll wait a little longer to make the purchase, giving me longer to hit a sale and also giving me a better window to actually appreciate the item.

Final Thoughts

Every significant purchase I make that isn’t extremely urgent – and I define a significant purchase as being a purchase of an item that costs $20 or more – goes through this process. I consider what features I want in the item before researching it at all so I’m not swayed. I give myself plenty of time to realize I don’t actually need or want the item, as well as time to find a sale. I check with trusted sources – either people in my social network, Consumer Reports, or a wide range of reviews where I look for overlaps. If it’s an item that’s new to me, I’ll try to buy an entry-level used item first.

If I manage to get through all of those steps, then I make the purchase.

You’d be surprised how often a purchase falls by the wayside due to this process. I’ll decide I don’t really need the item. Someone will give me an item. Even if I do buy, sometimes I’ll walk into a tremendous bargain.

It’s worth the process, every time, even if I do end up paying full price for something.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.