The Dash Mat Principle

Today, I want to discuss The Dash Mat Principle.

When purchasing a big-ticket item, like a new car, what’s the first thing you do? You go online to figure out a fair price for your desired make and model. Then you head to the dealer. Of course, that’s when the salesperson might point out, for example, that the showroom model has a dash mat: “Doesn’t it look nice? It’s also fantastically functional …”

Before you know it, your head is swimming with several upsells, and they can be tempting. What’s another couple-hundred bucks here and there, when you’re spending $20,000, right? And that’s the point—to ratchet up the total cost bit by bit. But here’s the thing …

It’s Not About the Dash Mat

It’s natural to compare the cost of a dash mat, let’s say $200, to the total cost of the car—that’s what the salesperson is banking on. When you’re facing a $20,000 tab, you’re less sensitive to the comparatively smaller price of “extras” … but that big total number is irrelevant.

The important thing to consider is your priorities. Do you really want to spend that $200—or (much) more, depending on how many options you’re considering?

Weighing the Cost

Looking back at your budget with Rule One in mind, you can see the power of that cash. $200 could top off your Christmas fund, go towards next month’s groceries or help you finally seed the ‘New Floors, Downstairs’ category. Or maybe it would buy you the priceless gift of peace of mind by simply sitting in your emergency fund.

It’s like when you’re in the grocery store picking up a bottle of mustard. Your options include the cheapo store brand, the name brand, a fancy organic option, plus a few others. They range in price from $0.99 to $4. Maybe you rarely use mustard—you only need a tablespoon for a recipe—and you could use the extra dollars to buy more fruit for on-the-go snacks. On the other hand, maybe you love $4 honey mustard and it makes your packed sandwich far more appetizing at lunchtime. Worth it!

The point is, they’re your dollars and you should spend them where they’ll bring you the best result (and not simply because something seems cheap in the grand scheme of your purchase).

Need Help?

Whether you’re in the market to spend several thousand dollars on a home renovation project or several hundred dollars on a new wardrobe for work, keep an eye out for The Dash Mat Principle. And if you’ve been wondering, “Who pays cash for a car?” check out our free, online workshop Pay for Big Expenses without Borrowing. It’s possible, and our teachers can show you how.

The post The Dash Mat Principle appeared first on YNAB.

Via Finance http://www.rssmix.com/