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Try a Real-Life Decision

Buy it? Pass it up? Charge it? These are the questions that should occur to you each time you are thinking of buying something. How do you decide? You should ask yourself a series of questions — to test if and how to make the purchase.

What would you do?

Kirsten is a high school junior. Her parents gave her a credit card, but she is supposed to use it only for emergencies. She is in the mall one day and sees the perfect dress for prom in a store window. The price tag reads $125, but the store is running a One-Day-Only Sale, all items are 25% off the ticketed price.Kirsten's grandmother, a dressmaker, has offered to make Kirsten's prom dress, and Kirsten has only $50 in her savings account. What should she do?

What is the need?

A prom dress

What are the alternatives?

Buy the Dress
Don’t buy the dress – wear the dress her grandmother sews.
Call home and talk about it.
Look for another dress.

What’s the money situation?

Doesn’t have the money in her wallet to buy the dress. She will have to use the credit card.

What are the disadvantages of charging the purchase?

The "sale" dress costs more than twice what Kirsten's has now in her spending money budget.

Even though the dress is on sale, Kirsten will have to pay finance charges on the dress until she pays it off.

Her grandmother can make a dress for the cost of the fabric. Under $35.

Grandma's feelings may be hurt.

Kirsten will be using the credit card for other than an emergency — her parents may be upset.

Weigh the advantages against the disadvantages

What would you do?

It may be easy for you to see what Kirsten should do. There are lots of disadvantages. In fact, there's no real advantage for Kirsten except that she loves the dress. You see that clearly because you're on the outside looking in – you're not emotionally involved in the purchase. Kirsten may want to deny the answers that stare her in the face because she WANTS the dress. Remember that when you find yourself in a similar situation.

Anytime you are thinking of making a purchase, run through these questions. If you answer them honestly, they will help you combat your impulses and make a good decision.