Pre-Orders and Financing

I sold other items to pay for my last pre order, so I put the cash in an envelope and set it aside until the order came in.

I have an account I only use for trains.  I put the money in it as soon as I preorder and leave it until payment due.  You'll thank yourself for having self discipline later...

Another good bit of advice-don't preorder what you can't afford.

Do a search, this has been discussed many times and there are lots of opinions on this subject.

The train hobby is a bit like the used car world.  Many of us have to sell what we are driving to buy something else we want.  In trains, most people do the same thing.  Trains on the secondary market can be a great buy for someone.  Used trains and used cars are alike.  You better know what you are buying.  I have purchased many used trains and sold many used trains.  I would never sell a used train that has not been fully checked out. 

After you plan your pre orders and are sure you can afford them, start by buying USPS Money orders, I start with about 20% of the total pre order, write the name/s of the hobby shop you ordered from on the USPS MO, that way you kind of mentally say this money is for the trains. Every two weeks, month, or what ever you want, continue buying MO's to finally satisfy the full amount of the order or close to it....Some times I even over bought MO's which is great since now I can either save for later purchases on or even buy a car or two....This way, you are sure of buying with cash you "HAVE"....It worked for me so far for a few VL items with my new addition to Legacy steam effects....Darn it!!!

The problem for me is when several items come in at the same time.  

I have a feeling several big-ticket tinplate items that I pre-ordered will be arriving this month or next.

Odd to say there is relief when a pre-order is delayed! 

I have a local train store and pre-order 90-95% of my train purchases from them. I visit there just about every week. They do a pretty good job of letting me know which orders I have coming in and when so I am able to keep up with my orders pretty well. I also have an Excel spreadsheet that lists all my pre-orders, when the item was ordered, item cost, and the expected ship date so I sometimes double check there as well.

You could get a savings account or similar and set the funds aside there until your orders come in. While working, before retirement, I had a savings plan at work that I put money in for large purchases. That served us very well for a long time, haven't made a car payment in many years thanks to that savings plan. Years ago they used to even pay interest on your average balance on those accounts.  

Then there is the old cash in the envelope trick when saving for something, no special accounts required there. Like the old Christmas funds or homemade layaway plans. One other thing in your favor is the items are never ahead of their shipping schedule, usually always ship later than stated.

A pre-order is an order, and I order only if the money is there to pay for it even if it may be months from now.  There have been times in my life when I had to get creative with "financing" to get by.  But these are just toys.  I figure just do without if there is any worry at all about the cash.

If you don't have the money NOW, don't fool your self and think you can save FOR IT.

don't buy"toys" NO MATTER HOW EXPENSIVE OR CHEAP, if you don't have the money to spend.

Brent

I think most dealers will only refund your deposit if the item is cancelled by the manufacturer. It is not the dealers fault the product delivery from the manufacturer takes too long. I'm sure they want to have the cash flow as much as anyone wants to have their ordered items. If there is no deposit then you are leaving the dealer stuck with trying to get rid of the item. Small dealers can't afford a lot of things happening like this. My LHS now requires a deposit because of this happening to them in the past.

So far I have not had this problem. Although almost nothing ever arrives on it's first scheduled date, it usually does arrive within a few months of the scheduled date. I am in no hurry for any of this stuff, so it really does not bother me when it arrives and it gives me something to look forward to. If it isn't cancelled it will arrive sooner or later and I will get it when it gets here.

I keep a record on an Excel spreadsheet, looking at what trains I have and about current value for them. When I sell a train to get money for another, I also estimate the money I will get before it's predicted to ship from my job, as well as keep jot down what I have on pre-order, and if it has or hasn't shipped yet.

If the item is in  red, it means I haven't bought it.

If it's in yellow, it is on order waiting to be shipped.

If it's in green, it has been paid and is on its way.

If you have the money, and you don't want to forget and spend it on something else, put it in a CD in a bank (be sure of the terms so that you can withdraw it without penalty when needed).  That way, it is not easily accessible for impulse purchases.

I keep a record of my preorders and estimated ship dates on a spreadsheet to keep track of my preorders.  It does help me to plan ahead and keep from spending on impulse train purchases.

Andy

I will not buy anything without the means to pay for it at the time of ordering.  That being said though, typically I put a deposit down (not required but I do) and then pay during the course of the pre-order.  The nice thing is, if the item comes in early I have the money to pay it off full.  So I am not leaving my LHS with the goods any longer than it takes for me to find time to get out there.

My big purchases are winding down as I anticipate a move into a new house this summer.  So I only have a few things ordered and have less than a couple hundred bucks to pay when they come in.

I understand where you are coming from.  In my 45 plus years in the hobby I made my first pre-order before Christmas.  I am assuming it will be a while until it comes in, and I'm fine with that.  I agree you have to find a way to set the money aside.  However, financial problems can come into play.  In my case, I am wondering if it was the best idea.  My wife will very likely lose her job come summer or at least be cut back and lose her attractive medical plan.  My company's plan is very expensive, and considering our health problems, I could see my wife no longer being employable plus we could run our deductible to the max.  I have got to keep that money set aside at all costs.  I don't think I will pre-order again.  It takes too long from a financial planning standpoint.

As most here have said, discipline is the key.  Financial discipline is hard regardless of one's endeavor, but model trains are especially challenging because of the missed delivery dates.  i've had items not show up, I've had items show up a year after their stated date, etc.    Personally, I'm done with pre-orders for the most part;  I find that often by the time they do get here, I no longer have that much of an interest in the item and I have already changed things up on my layout.  I'm not one to back out of a pre-order unless their are extenuating circumstances, so moving forward I plan to avoid the experience entirely.  the exception might be less expensive items - $50.00 for a piece of rolling stock isn't the budget shocker that a $1000 train is    It's frustrating sometimes, but lately I'm finding that the things I want aren't even on my radar until I see them in person - case in point, I just picked up an MTH C30-7 at a real sweetheart price.  I would have never pre-ordered something like this, but when I saw it "in the flesh" I snagged it.  

As far as "tricks" for setting it aside;  get it out of your wallet as fast as possible and into someplace that does not provide easy access.   If it's in the wallet or in the nightstand you will spend it... or someone else will   

My credit union makes it easy to have several sub-accounts. I have a separate account just for train stuff. The credit union allows me to have some money automatically transferred to my "trains" each payday. (I also have direct deposit)
I have several other similar accounts.

Been doing this for many years, its worked well for me.

Start a train fund (some kind of bank account) and deposit to it on a schedule that will coincide with the amount you need and the estimated delivery date.

I "pre-ordered" (that is the same as saying irregardless, not really a word) from my LHS. Payment due on delivery of item to store. It was VERY late but I was not on the hook for anything.

I think there's a TON of truth to that statement. 

I was particularly glad to hear the LCT Lionel Lines "uncatalog'd" standard gauge 400E was delayed a few months!  Needed a huge breather after all the stuff from 2014 arrived in November/December!!! 

Of course, all these great "clearance" sales in January/February sure haven't helped either!!!  

David

I make payments on my pre-orders. That way I know I can't spend it elsewhere, and that the item will be paid for by the time it comes out. If the item gets cancelled I simply get a credit, and use it for something else.

Bill

I only preorder when I know that funds will be available when the item is scheduled. I have had to "re-budget" multiple times for the same item when the delivery gets extended and extended and....

Gilly

I am heartened to see so many here share my view, which BReece put so well: "If you don't have the money NOW, don't fool your self and think you can save FOR IT."  Apparently model railroaders are, whatever else they may be, prudent and wise people.

I am not against pushing your finances for a good and necessary cause.  We've all done it, I'm sure.  But model railroading is supposed to be fun and relaxing, and I would think worrying about paying for something would take the edge off that.

I've always figured you don't even push the envelope on finances when buying toys.  A number of years ago I bought an exotic Italian sports car - red, mid-engine, 200 mph - the whole nine yards.  An acquaintance looked at it and asked, "If you don't mind, what are the payments on something like this?"  I told him I didn't mind, but I had no idea: it had never even occurred to me to ask - or to finance so utterly foolish a toy purchase.  The guy is in bankruptcy again, at age 66, for the second time in his life now (that, I understand, is rather hard to do because it takes so long to get out the first time and then get that far in problems again).  He is not a model railroader..

Remember what Dickens said.  Best to be the guy who only spends nineteen pounds six, not twenty pounds six.

I think everyone's methods posted here are good.  However, Bill's method is one I never thought of, but would solve the problem I stated last night of my concern of a loss of job.  The money would be spent like anything else, and I wouldn't feel guilty being obliged to pay for a $400 locomotive.

Bill, thanks.  I will have to contact my hobby shop owner in regards to this.

+1. My folks were raised in the Depression. We never bought anything other than a house on credit. I have followed that philosophy all my life. If you don't have the money in hand don't buy it.

Pete

Your welcome Mark. I have been doing it that way for quite a while now. It works for me for the same reasons you had mentioned in your post.

Bill

BAD ADVICE

Dicipline, is much better and it will build character.  Not too many of us have the cash on hand for everything we want.  So we sacrafice and save.

When GGD announced the El Capitan last February I wanted it more than any other O guage item I have ever seen.  Slight problem... the 12-car set list for $3,000.  I did not have the cash on-hand.

Well these cars should be on-shore in May and I am happy to report that I have saved enough allowance to reward myself.  

Where there is a will, there IS a way.   If you want it bad enough, you'll find a way.

Good idea about the colors, I will have to try that with mine. I have a few other spreadsheets that use color, but for some reason I never thought of doing that for my train SS.

I also do as you do here, and sometimes pay things off before shipment as well. Helps out my LHS as they are a small shop and it helps their cash flow. I also always pick things up within a day or two of their arrival at my LHS. They give me a little more of a price break for pre-ordering too, so we both come out better.

I have a Lionel ceramic Locomotive "piggy bank"

quote:

Dicipline, is much better and it will build character.  Not too many of us have the cash on hand for everything we want.  So we sacrafice and save.

Not purchasing something you want because don't have the cash is a form of discipline too.

This how I do it.  Just remember they're only toys!  There's no such thing as an emergency here.  One last thing - never ever put it on a credit card.  Put it on a debit card.

Mark,

I am sure they will appreciate this, my LHS does and I do the same thing fairly often with them. They might possibly even give you a little extra discount.  

Good advice on making train purchases, however we use our credit card for every purchase we make, except Costco (they don't take Visa). We get a 1%-5% rebate on every purchase make with it and also get to use their money for a month to earn it. That's better than bank interest these days. The key is to NOT charge more than you can pay for each month, which we watch pretty carefully. That's where the discipline comes in and the great advice above - 'if you don't have the cash on hand, don't buy the item'.

Purchasing this way, we usually get a check from the credit card company about every six months for between $150-$200. Nice little bonus to put toward another train or other purchase when you are on a fixed income. When used properly, credit cards can be used to your advantage and a pretty good one too. Just don't over do the charges to where you can't pay it off monthly. If you do that you will go in the hole pretty quickly.

That's my method.  As for "pre-ordering," well, I don't like it and don't do it.

As mentioned many times above, I'll look at my RR-envelope before I order. It is

out of the way. I will feed it with left-over cash at the end of the month, plus any

money I get from the occasional RR show sale.

But, my favorite trick is that I essentially do not order a big-buck item that is not

"in the Envelope", but when it comes in, if possible, I just pay for it out of current

cash flow - leaving the Envelope untouched - ready to slowly grow and to do more financial "backup" in the future. 

Compared to many, my life is pretty simple, financially, and I use my CC as a short-term interest-free loan - I treat it like a debit card. I never pay interest. If I don't have the

money, I don't buy it. Anything.

However, I am approaching a crunch where The Envelope might actually take a major hit.

I spent a bit while forgetting the Lionel USRA Heavy Mike (L&N) that is due in March.

Hopefully there will be another delay. Delays can be your friends. 

Thanks for all the replies. I appreciate the advice. I've have never pre-ordered an item without having the money for it when I place the order.  My issue is more about making sure I still have the money when the item arrives.  I keep a monthly budget that covers mortgage, utilities, food, gas, etc.  All the necessities, but not the hobbies, savings, etc.  After bills are paid, I usually try to put half of the monthly "extra" money into savings and the rest goes to fun stuff.  So when I order an item, I do so knowing my account has the money in it for the purchase.  But what happens to me sometimes is I forget the money is already allotted for that purchase and months later I will see something I want to buy.  I check my account and there is money to make the purchase, so I do.  Then the pre-ordered item arrives and I've spent the money originally allotted for it.  I always keep enough in savings that paying for the pre-ordered item is not a problem, but its just a pain in the butt because now I need to replace the savings. I like the idea of a separate train account either through the bank or keeping money put aside. I hadn't really thought about the separate account idea before. I guess I also need to keep better track of the pre-orders I have made.

I have to admit it... I'm a huge Dave Ramsey fan.  Unless I have the cash, I don't buy it.  

I also have a dedicated train account.  All money from my part time job goes into this account.

Jeff Davis

I'd just move out of TN, like I did. It will be a win / win on many levels.

Pre-ordering from a established dealer is fine and most feel ok with a deposit of not more than 10%. When their is a small deposit both parties feel obligated to honor it. I do know of some dealers who have not honored a pre-order without a deposit because the item got hot. The upcoming Vision Reefers are sold out everywhere and I can see this happening. What really gets me is a manufacturer who wants you to pay in full for a item and use YOUR money to produce that item. That to me is insane and a recipe for disaster.

There are many fine dealers here besides us and I urge you to support them!

Worst advice

That is not always the case no matter how one plans to many things happen today your advice is telling people go ahead do it and you will be fine you got lucky or in a fixed income where you had it covered most are not today's economy is to shaky to buy on a whim now if you honestly see you have a clear amount to set a side I still would go with caution as most times even these you have to prebuy ( which I will never do but thats another story) I see so many of them showing up on ebay and other places. 

Some people do not have the control you talk about and never will actually most people don't 

I'm sorry... But that's just downright wrong.  And if that happened to me, I'd never purchase from that dealer again.  That kind of nonsense happened often back in the 1980's -- when sellers were trying to make stuff an overnight collectible the moment it hit the streets.  Certainly didn't bring out the better side of our hobby.   I always found it ironic when stuff was advertised as hot or rare to justify raising prices.   Or even better, some sellers would list the price as "CALL" back when printed ads were king.  Yet everyone always had more than enough of those items to sell.  

OTOH, I know of one large dealer who accepts pre-orders without a deposit, and has never raised selling prices when newly released "hot" items hit the street -- even when Lionel short-shipped the order quanitity.  I realize nobody is under any obligation to hold prices firm in our "free market".  But you just really gotta admire dealers who continue selling merchandise at their originally advertised prices -- even when new items are "hot".  That's one of the ways they build a loyal customer base over the long haul.

David

It's the easiest method I've found.

I also put a little money each month in it for the heck of it, even if I don't have an order to cover.  It works great! 

Case in point, GGD just announced a new set of passenger cars I've wanted for a long time.  I clicked 'reserve' and put in my selection.  With my method of putting a few dollars in the account each month, I covered the cost of these beautiful cars.  So, they're already paid in full!

So, I take it that means to encourage them to spend like there's no tomorrow????

Exactly what's wrong with encouraging folks to save up for what they want?

This is why all these financial guru's at PBS pledge time make a mint telling folks for 90 minutes not to spend more than they make.  And still folks don't listen.

Rusty

quote:

Exactly what's wrong with encouraging folks to save up for what they want?

Is that what was suggested?
I thought the suggestion was to order the item with a plan to save money to pay for it by the time it arrives.

That is not something I would encourage. However, one of my sons uses financing deals to pay for things from time to time (no interest until some future date). So far he has always paid off the bills before any interest was accrued. I guess that's somewhat similar.

HOME EQUITY LINE OF CREDIT    

not what I was saying what I was saying is normally something comes up. Saving for something you want is great but don't order it with the intent to save the money for it by the time it is delivered is what I was saying. Unless you have a back up plan just encase. 

That's precisely an example of why folks shouldn't be making blanket statements about never using credit cards for purchases.  Paying the balance off before interest accrues makes using credit cards a perfectly acceptable means of payment -- especially when there's a promotional 0% interest rate offered for 12 or 18 months.  

Using a debit card for purchases generates far too much exposure to your funds in this era of cyber-crimes.  The risk far outweighs the tendency to overspend, as long as you're a responsible spender.

I know the OP solicited feedback, but usually it's best to let folks spend their money however they see fit.  The topic falls into the religion/politics territory, in that you'll never get any consensus on anything.  

David 

I am not suggesting anyone use one of these for train purchases, but it's not a bad idea if you watch what you do with it. We have had one for many years (late '80s) as a back-up for emergencies or home remodeling projects. We originally got it to repair our bowing in foundation. Fortunately, we have never needed it (foundation was not as bad as we had thought), but it's nice to have around just in case. 

Ours is free unless you use it, then you only pay interest on the balance you owe. If you don't use any of the money it just sits there waiting at no cost to you. The interest is currently very low, so if you do use it you get an extremely reasonable rate, much better than a credit card if you have to extend the re-payment of a major purchase or unexpected home repair.

However, I will repeat, I would not get something like this for the sole purpose of train purchases. That could be real trouble. I still recommend staying with the 'if you don't have it, don't buy it' plan for train and all other leisure time and entertainment purchases.

At my post 72 age I just use the needed $ from the IRS' annual required % liquidation of my IRA[aft tax]. The good news now---I don't need any more trains.

Quote from Rocky Mountain:

OTOH, I know of one large dealer who accepts pre-orders without a deposit, and has never raised selling prices when newly released "hot" items hit the street -- even when Lionel short-shipped the order quanitity.  I realize nobody is under any obligation to hold prices firm in our "free market".  But you just really gotta admire dealers who continue selling merchandise at their originally advertised prices -- even when new items are "hot".  That's one of the ways they build a loyal customer base over the long haul.

I know a smaller dealer that is the same way. My LHS lets me order no money down, tho I have offered. He emails me when items show up and I go pay him.

I use the save for it method and have not failed yet. It does take willpower.

And sometimes I just look at the price and say NO.

Ya gotta know your limits and those are different for each person.