As many homeowners know, it only takes one upgrade or purchase to make a big difference in your home.
Money experts Bernadette Joy and Jannese Torres-Rodriguez both point to new couches they purchased as game-changers for their home. They say these upgrades made immediate and significant enhancements to their lives at home.
For other people, maybe it’s a new area rug or end table. Or even a new decorative piece for an entryway.
But how does one plan and budget for such purchases? Joy and Torres-Rodriguez shared some advice based on how they approached their purchases, and how to weigh the purchase in the broader context of their lives.
For many Americans, credit cards can be a powerful tool for all kinds of purchases, from everyday staples to once-in-a-generation home furnishings. The best credit cards offer ways to finance bigger purchases and save on interest, or to earn rewards on big purchases that are paid off before the next statement comes.
The new Key Rewards Visa card is a great example. A collaboration between high-end home retailer Williams-Sonoma, Inc., and Capital One, the card offers great ways to reward yourself by getting even more out of big planned home purchases. It also works and earns the same rewards at the entire Williams-Sonoma family of brands, including Williams-Sonoma, Inc., brands like Williams-Sonoma, West Elm, and Mark & Graham — both online and in-store. Combined with financing opportunities that come with the card, it can be a helpful tool that earns you extra rewards for all your cozy costs, benefiting you in the present and in the future.
Here’s what Joy and Torres-Rodriguez have to say about the game-changing home purchases they’ve made, and what you should know about paying for home purchases:
Money expert Bernadette Joy believes in a physical object’s power to help you visualize and manifest the life you want. And for many people, that life starts at home.
Joy says she downsized from a 4-bedroom house to a 2-bedroom condo during the pandemic to be closer to the mountains. One big but necessary household purchase for her was a living room couch, she told us recently. And the reason goes beyond providing a place to sit.
“It holds special significance because it represents what I wanted this time in my life to look like,” Joy says.
Joy is approaching financial independence and early retirement (known by the acronym FIRE), and she wanted her couch to evoke the same comfy, cozy, and inviting vibe she hopes to feel as an early retiree.
“When I went looking for a new couch, I tried to envision my life on it in early retirement: reading books, snuggling by the fire under a warm blanket, catching up with friends on video and drinking lots of tea,” Joy says. “By having a couch that fit into that picture, it helped me start practicing what it would be like to retire early.”
“It was definitely not in my character to splurge on furniture,” Torres-Rodriguez recently told us. “But I was happy with not deciding to go the cheapest route and instead buying what would be the furniture that I could see myself enjoying — not just me but with friends, with family, people coming over — for years and years to come.”
With a little advance planning, Torres-Rodriguez financed the couch, along with a dining room table, in a way that let her pay off the purchase over time and interest-free. This kind of financing on expensive items is common on many top credit cards, including the Key Rewards Visa card. For people with a plan to ensure paying off the balance before the promotional period ends, this approach can help spread out a big purchase over time. “It was kind of a no-brainer because I knew I’m not going to take five years to pay this off.”
And the purchase has already proven to be well worth it, she says. And it’s much more than just a spot to sit for Torres-Rodriguez, as well.
“It’s great because we can really have everybody get together, talking, chatting, just being all able to be comfortable in the same space,” Torres-Rodriguez says. “I remember growing up when people had to come over and we were having like these big parties in a house. I’m Latina, so we always had a million people at our house. Sometimes we’d end up sitting on the floor, have to get folding chairs, and there was never really a way to get comfortable.”
Planning and Budgeting for Big Purchases
For Joy, buying big-ticket household wares usually happens in smaller steps with plenty of advanced preparation.
“In the last three homes I bought, I allocated at least $1,000 per room to save up for furniture and décor as part of what I saved up toward buying the house,” Joy says. ”For our two-bedroom condo, I saved an extra $5,000 to cover things I would need for the two bedrooms, dining room, living room, and kitchen.”
Joy decided one year out to start saving. She divided $5,000 by 12 and put at least $416 per month into a high-yield savings account in the 12 months leading up to her home purchase.
“Even though it was pricier than I’ve ever spent on a couch, I was able to justify it with my one dollar rule,” says Joy.
The one dollar rule says it’s generally worth buying something if it equates to $1 per use fairly quickly. This guideline can help put big purchases in perspective, and prevent the guilt so many people are used to feeling when it comes to big expenses.
“If you are buying a couch that’s $1,000 and use it almost every day, it would only take about three years for it to be $1 per use,” Joy says. “When I think about it that way, it makes me realize I’m not wasting money, but investing in something useful.”
However you make big or small home purchases, having a plan goes a long way toward fitting them into your budget. For as much time as people spend at home, incremental upgrades and new home furnishing pieces can bring a lot of enrichment to people’s lives. But it’s important to pay down purchases before promotional periods and interest kick in, which could set you back in the long run.
Reward Yourself By Using the New Key Rewards Credit Card Program
Saving ahead of time is a great way to budget. Meanwhile, using a credit card with rewards and promotional financing can deliver extra perks.
The Key Rewards Credit Card Program makes it easy for people who love enhancing their homes to earn rewards across major brands like Pottery Barn, Williams-Sonoma, and West Elm.
With no annual fee, the card offers 5% rewards on all purchases at Williams-Sonoma, Inc., brands, or 12-month promotional financing on purchases $750 and up (after 12 months, a 24.99% variable rate kicks in). Cardmembers can also earn 4% back in rewards on grocery stores and restaurants (excluding fast food), and a special 10% back in rewards across all of the family of brands within the first 30 days of account opening. The financing option can be great to spread out a large purchase over time, while the rewards can knock down the total cost of future purchases to upgrade your home.
Whether you use the special financing or save in advance to pay down a big purchase and bank the rewards for future purchases, planning ahead is essential. If using the financing options, make a plan and budget to pay off the purchases in installments over the life of the financing period to make sure you pay it off before interest charges kick in. These card benefits offer customers ongoing opportunities to enhance their homes:
- Versatile use for home interior enthusiasts: The card will work in all of the Williams-Sonoma, Inc., brands, including Williams-Sonoma, Pottery Barn, West Elm, and Mark & Graham — both online and in-store.
- A special welcome offer:
- New cardmembers will earn double rewards at Williams-Sonoma, Inc. brands — a total of 10% back in rewards — for the first 30 days from account opening.
- Enhanced rewards that help fund your elevated in-home experiences: Earn rewards at the following rates:
- 5% rewards across Williams-Sonoma family of brands
- 4% at grocery stores and restaurants (excluding fast food)
- 1% everywhere else Visa cards are accepted
Considerations for Charging Major Purchases
There’s no way around it: Furniture and home goods can easily add up in cost. Especially when you’re the type of person who takes pride in making home a warm, cozy environment to be in.
Using a credit card for major purchases allows consumers the chance to earn rewards on these big expenses. However, there are some basic tips to make sure you’re doing so without jeopardizing your long-term financial health.
It’s important to remember your credit score and consider how adding another card to your wallet may show up in a credit check.
“I definitely factor in if I am going to make other large purchases in the same amount of time,” says Torres-Rodriguez. You don’t want to ding your credit for something that may be more important like applying for a mortgage, she says. Opening too many credit card accounts right before applying for a mortgage can be a red flag to some lenders.
Lastly, always make sure you budget to pay off the card in a timely way. Experts recommend paying balances off in full when possible, or having a plan to pay down the card before its no-interest period expires.
“I like using credit cards for basically every purchase,” Torres-Rodriguez says. “I never use my debit card for anything. If I know that I’m going to buy something that’s a higher-ticket item, what I like to do is actually just save the money in my high-yield savings account.”
Once she has the money saved, she purchases it with credit and then pays it off before starting a habit of having revolving debt. That way she gets the rewards toward future purchases without ever paying interest.