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Personal Finance - The Impact of Big Purchases

In our lifetime we encounter events that are exciting and emotional. Many of these require a significant financial commitment such as the purchase of a car or home. We have many choices with big purchases; and understanding how decisions will have an impact on your financial position may save you money over time.

I have provided some examples below:

  • Of course the difference between a new car at $25,000 and a used car at $15,000 is $10,000; however, when you consider that you may purchase 10 or more cars in a lifetime this difference will accumulate to more than $100,000 even before you add the difference in interest on debt.
  • Another option we have is how long we choose to own our purchases. A person who purchases a vehicle every 5 years versus 10 years will potentially purchase 6 more cars over a lifetime. At $15,000 per vehicle this is $90,000 during your life.
  • A home purchase of $100,000 versus $150,000 can be a difference of $80,000 to $100,000 for a 30-year mortgage depending on the interest rate.
  • The length of the loan can also have a significant impact. For a $100,000 home loan, the interest expense difference between a 15-year mortgage and 30-year mortgage is $35,000 to $40,000 depending on the interest rate.

These examples can apply to smaller purchases as well, such as appliances, electronics or vacations.

Regardless of the decisions you make, product research and financial planning are important when considering big purchases. Personal preference, emotion and need will always play a role in the decisions we make; but thinking through the choices in cost and debt will sometimes lead to decisions that require less money in your lifetime.

Greg Noonan

Greg Noonan, Bus Ad '83, is president of Gregory A. Noonan and Associates, Inc. (bank and business consulting,, and SaVonk, LLC, a website offering financial tips and tools. He can be reached at




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