Purchasing a Diamond Engagement Ring: Part III

This is the third of a three part post which I give you my whole story of purchasing a diamond ring for my now fiancé. This post describes how I am using a credit card to buy the diamond ring.

One of the most important thought process is thinking about what you, as a couple can afford (even though you are paying for it). One of the last things you want to do  in this new phase of your life is begin with new debt or more debt. This is very hard to consider when you have a PR scam that says that the cost of an engagement ring should at least be 2 months salary and that you want to give them the best. I took a hard look at my fiances and choose a price range that was slightly higher than I had saved up for but realized that I would just have to be tighter with my budget...but I could afford it. I would say to anyone who is nervous that their someone special wants an expensive ring that you cannot afford, is to have in place a special way of letting them know that if money wasn't an object that you would give them the world. You are going to be with them forever and money is going to be a huge part of your marriage so don't start off on the wrong foot. You can always upgrade a diamond 5yr, 10yr, and so on for anniversaries if you like.

One of my problems I had was how was I going to actually pay for this purchase, cash, credit, or financing. I started saving up for the ring a little late but when I got serious about it I really tighten my buckle and beefed up my "wedding ring fund" every paycheck. At the time I was saving for the vacation trip as well, so I wished I would have started saving earlier...dont we always say that. I had, sitting in my "wedding ring fund" about 1/3 of the cost I had budgeted and I had the other 2/3 sitting in my saving account that I did not really wanted to tap into, especially in these economic times. I have 2 credit cards that are fully paid off and are only used for points. I started to look for credit cards with 0% APR for the first 12 months and found the one I wanted. I have great credit, so fortunately I was able to open it up and put the ring on the card. So this might not seem like a good idea but here is my full thought process of why I decided to put it on plastic.

1) I knew that it would help my credit and with trying to purchase a house later this year every bit helps these days. (I know I could still use credit to purchase and pay it in full so I don't have any debt.)

2) I could write a check and pay it off today if I needed to. Meanwhile my money is sitting in a high yield saving account with ING Direct. So I am borrowing money interest free and making money off the interest I am making in the saving account. 

3)My monthly payment is 2.5% of the remaining balance on the credit card so I only pay the minimum every month. I am acting as if I am sending the full amount by sending the 2.5% to the credit card and putting the remaining into a savings account which is creating some interest for me. On the 12 month I will cut a check for the remaining balance that is left on the credit card from my savings account. At the end of the day I am borrowing money interest free to invest for a 2% return.

Just as an example, let just say the ring cost $1000.00. Divide that by 12 months, around $83.30 a month. My credit card payment is 2.5% of that, so it is about $25.00/month. I send the remaining $58.30 to my saving account to make interest for me. So at the end of twelve months I have paid  around $300.00 to the credit card and have made interest off the remaining $700 sitting in the saving account. I write the check for the remaining 700 and have a few dollars from the interest I made.

4) With borrowing  interest free I can still have more cash on hand if something were to happen to my employment.

So there you have it, overall I would say that it is a very nervous, exciting , and really cool experience for purchasing something that is a) so important and b) so expensive. These three post might sound like I am just concerned with spending money on something that is very materialistic, I am just giving you my personal experience. Just remember that at the end of the day, if you can not afford a diamond, it is ok. It's not so much about the diamond but about your love and the statement to their family and friends by saying, 'I have found the one person I am ready to settle down with and start a new life with.' I hope you have gain some inside knowledge with making that next step, so please leave comments and suggestions to others.

Related Post

Purchasing a Diamond Engagement Ring: Part I
Purchasing a Diamond Engagement Ring: Part II
Purchasing a Diamond Engagement Ring: Part III
Should you Calculate a Diamond in your Net Worth?

 

Purchasing a Diamond Engagement Ring: Part II

This is the second of a three part post which I give you my whole story of purchasing a diamond ring for my now fiancé. This part describes actually doing research, looking, and buying the diamond. 

I first started out seeking the diamond the same way I discovered PF blogs, by googling "buying a diamond engagement ring". I read a few articles/blogs and eventually lead me to the 4C's, I won't bother you with those details as you should do your own research on this before you start. Next thing I did was reach out to a couple of my closest friends who had been through the process, and got their opinion. One of my buddies sent me to Blue Nile where I spend some time educating myself and looking at what I could afford with the budget that I had. 

Once I kinda knew what I was looking for I decided to check out a local jewelry store so I could at least see the difference in person. At this point I thought I would go in and look at diamonds and get a feel before I purchased one online at Blue Nile (they are a publicly traded company listed on the NASDAQ under the symbol NILE) so I knew they were reputable. Once I got into the store the salesman took me through the educational part which I told him I hadn't the slightest idea besides some research online. Once I looked at a few diamonds along with the salesman telling me that could beat any price, I knew most likely would be buying from them.

One thing that I appreciated was that the salesman didn't overwhelm me with a bunch of diamonds, he showed me a few based off of the 4C's and asked me which one's I liked. I suggest as well that  you don't overwhelm yourself by looking at a ton of diamonds, it will make your head spin...think Microsoft redesigns the iPod Package. Once he knew what I  liked he asked me what my price range was. He showed me 3 or 4 diamonds that were in my price range to show me color, clarity, and size. I believe it helped me with pricing that I told him I was taking my time and was going to explore all my options, but that I was ready to purchase. He offered me the completed ring at price of the diamond, with no sales tax and any white gold setting I liked. (they were a diamond wholesaler before they opened the store, so they had wiggle room).

I left the store and wrote down my measurements from the diamond that I liked and went online to see the pricing of the same size, color, and clarity. The price at the store was better than those online. This helped because I knew that I could look at the exact diamond I was going to buy.  I went back into the store and looked again knowing that I was most like going to make that purchase. 

At the time I was looking at round diamonds that he had shown me but had really like the princess cut(square) diamonds that I had seen on friends. And yes guys, you should look at other's peoples diamonds, you are spending your hard earned money to give that someone special a commitment for life, why would you not care? I decided to look at the same specs of the round but in a princess cut. I still had a hard time deciding but the princess cut keep calling my name and eventually I pulled the trigger.

After I bought the ring I thought that I was all ready to go and that all I needed to do was pick it up. I decide to let them hold it until the day before we left for California. In the process of getting ready I had overlooked one thing... I hadn't seen the diamond  in its setting to make sure it was the right one. I stopped by and looked at the ring as a whole and I have to say that I was really proud and it looked amazing. It was perfect for the woman that was going to be with me forever and a very rewarding experience.

Tomorrow I will be going over the payment process that I am using to pay for it so check back and add comments and let me know how I did!

Related Post

Purchasing a Diamond Engagement Ring: Part I

Purchasing a Diamond Engagement Ring: Part II

Should you Calculate a Diamond in your Net Worth?

Purchasing a Diamond Engagement Ring: Part I

Over the rest of the week I will be posting a three part series about my process from start to finish on purchasing an engagement diamond ring. This is part one of three so check back on Wednesday and Thursday.

Recently I got engaged to my girlfriend while we were on vacation, but before all the fun stuff happened I had to go through the process every man SHOULD and WANT to go through. That is, picking out that perfect diamond for the person you are going to be with the rest of your life.

Here are some pretty interesting facts about these little beauties before I get into my process.

A diamond is the allotrope of carbon where the carbon atoms are arranged in an isometric-hexoctahedral crystal lattice. WHAT?

The word comes from the Greek word "adamas," and this means "unconquerable and indestructible."

Diamonds in fact don’t last forever, but “only” several million years before they disintegrate.

To produce a single one-carat diamond, 250 tons of earth will be mined. 

A diamond has very high melting point of 3820 K (3547 °C / 6420 °F) and a boiling point of 5100 K (4827 °C / 8720 °F).

The diamond is the hardest natural substance found on the earth.

So no matter what advertisers say that make people want to go out and spend a lot of money on a Diamond, you must admit that it is a pretty kick A$$ mineral! And who deserves it more than the person you love most on earth. I think finding the right Diamond, big or small, expensive or inexpensive is sort of like picking a pet if you have been through the process. You kinda pick each other once you come across the one you know its right, even though it might take some time.

I will share my experience with you, only as how I picked out the perfect diamond...for my fiancé. It might not be the perfect diamond for you or for that someone special in your life, but take my experience and learn, build, and let it inspire you.

As an introduction to where my journey began, I heard numerous times that I needed to talk with my girlfriend and figure out what she wanted and that we should go look together. I knew my girlfriend enough without ever talking about it that she would want me to pick the diamond ring out for her and surprise her. I did ask here mother and her sister and neither of them knew exactly what she wanted. She admitted after that she didn't know anything about diamonds and frankly didn't want to be apart of it. Personally, I wanted to pick the diamond and since I'm never going wear it or anything it made me take a lot of pride in picking it out instead of just paying for it.

Some guys will definitely want to go with their girlfriends to look or they might at least want to know what she is looking for, but do not feel the pressure if you think she wants you to pick it out. Tomorrow I will be talking about my process with going into the store and actually looking at diamonds and purchasing the one.

Do you have suggestions for others? Leave a comment!

Vacation's Over but Life is Just Beginning!

So we are back from our vacation in California and have had a blast. We probably over extended ourselves a little and my budget is not going to look pretty this month, but its all worth it because we just got engaged! We (the fiancé and me) will both be doing double time on not spending any extra money this next month so that we can keep our budgets in tact. 

So I will have some new post in the upcoming months about buying a Diamond for the first time, combining finances, marriage budgets, and other post that fall into these categories. We are also looking to purchase a home this year before the first time home buyer tax credit expires.

If anyone has some good advice or suggestions for us please let us know...I have bookmarked a few blog post other bloggers have written on some of their experiences and will post some in the future. Any advice or tips would be great because after all, this is a blog that I started not only to start a conversation with others but to help me out with finances in different stages of my life.

I am also hoping to get up and running a little better with postings, right now I am at about 3-4 post per week but want to see if I can make it at least 5 post a week. Please keep posting comments and please give me all of your feedback!

March 09 Net Worth Update: Credit Bad, Emergency Fund Good!

Once again it is time to go over my net worth. My monthly reminder of how I am doing with my finances. Everything seems to be the same except one category...DEBT!!! Actually it is not that bad once I break it down for you guys. At least the stock market is doing a little better than they have, even though my Stocks/Brokerage still seems to be losing some money. With this vacation I am going to go ahead and guess that next month net worth will be down also but we will see. Here is the break down:

Cash saving is up slightly I just keep cracking the whip on myself to keep saving up as much as possible. This has the 10k of my emergency fund, along with my monthly budget. It also has different funds like car, vacation, etc... It also has a house down payment fund which is the next goal I am setting for myself finically. 

Stocks/ Brokerage - I now know why they call it a brokerage, because its going broke every month...ha.

Retirement 401k - There you go...starting to see an uptick in the market, its nice to see it going up for once, I never really followed my 401k until about 4-5 months ago so I never really knew how it felt to be making money over a month. I just knew that watching it lose money every month isn't much fun.

Roth IRA - See previous

Debts and Liabilities - Ouch! This one is going to hurt, but just a little

Credit Card - 1) $935.00 is on my AMEX for my vacation(hotels and rental cars) which I get miles and I will be paying this in full before I get charged interest.

Credit Card - 2) $4200.00 this is a new card I just opened which is 12 month 0% APR.  I have the money in my savings to pay off the remaining  balance if I wanted if something unexpected came up.  $4,200 divided by 12 months = $350.00 a month. I will be paying the minimum of the card every month (2.5% of remaining balance) while putting the rest of what remains of the $350.00 into a high yield saving account to make a little interest off while I borrow interest free. I will be cutting a check for the remaining balance on the 12 month of next year before the 0% APR expires.

Car Loan - I want to put more down against the principle but its just not adding up after putting money away for a down payment for a house.  I currently have 4.2% APR so at least it is not killing my wealth but so much. I would love to do it but I am looking to purchase a house close to the end of the year so I can get the first time home buyer tax credit.

Overall - I am still pretty happy with where I am sitting right now, I have to keep myself honest and hopefully knock down some of this debt down. I have a lot of changes coming down the pipeline this year that I already know of, and of course there can always be unexpected situations that come up that you are not planning for. So, I am going to be thankful for where I am finically that this point in my life and hopefully it will remain getting better month by month. Remember the old elementary song, inch by inch, row by row, I am going to make this garden grow!