Quote:
Originally Posted by LivingAlmostLarge
Does saving cash to buy an item mean you can afford?
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Absolutely not.
Let's say you've saved up $5,000 to take a vacation. But you also happen to have $20,000 in credit card debt. Just because you are paying cash for the trip doesn't mean you can afford it. It just means you've delayed repaying your debt by that much longer in order to spend more money that you don't really have.
You also need to look at other factors. Perhaps you have no debt and saved up that same $5,000 for a vacation. But you are not participating in your company's 401k. You aren't funding a Roth. You have no emergency fund. Just because you have that 5K in cash doesn't mean you can afford to blow it on a vacation.
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Steve
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