We’re Engaged!

6 minute read

I asked my best friend to marry me and she said yes! I think, at least. It’s still up in the air as to what she said while sobbing.

I’m so proud of the progress that Amanda has made since I first met her in all aspects of her life and I’m excited to see what’s in store for our future together. Not only has she found a relationship with Christ and become involved in the church, but she has helped me become stronger in my faith, she’s gone back to school to pursue her passion while working full-time, she’s completely turned around her financial situation, and she’s made great progress towards her physique goals, among other things. I love to see her progress every day and I feel extremely fortunate to have someone who loves and cares for me so much.

Now that the mushy stuff if out of the way, I hope that I can provide some value and help anyone else who may be going through the process of purchasing an engagement ring.

I don’t mean to say that buying an engagement ring should only be viewed through a financial lens, because it certainly should not. It’s a huge decision for your life that will hopefully be something your significant other cherishes and wears forever. You should consider the person you’re buying it for and what style you think they’ll like. With that being said, it is a big financial decision that could have a long-term impact on your financial situation and that I believe you should prepare yourself for.

I’ve offered some insight into my buying process below which is similar to what I go through when making all of my significant purchases. Buying an engagement ring can be very complicated, if you want to be thorough, so I’ve spared many of the more intricate details and tried to provide a solid overview.

If you want to read a brief guide to buying a ring from someone who isn’t qualified to provide said guide, then keep reading.

Decide If Your Fiancée Will Be Involved

First, I have to confess. Amanda picked out her engagement ring. She wanted to be involved in the process and I didn’t want to buy something that she didn’t like. Yes, I know Amanda and her personality, but when it comes to jewelry she just doesn’t wear it often. I would have been clueless and would have probably ended up buying something that she didn’t like or that she didn’t feel was exactly what she wanted. I wanted to get something for her that I knew she’d love and value forever.

Do Your Research

I’m the guy who does an over-the-top amount of research before purchasing anything. Pulling up 4,752 tabs in Chrome and reading all of the articles, comparing prices and value, reading reviews. Most people probably find this exhausting and just go with the products or brand that they’ve heard of before rather than doing extensive research, but I’m just not wired that way.

As you can guess, I did extensive research before ever stepping in front of a salesperson. Not only did it help me to understand what I was about to purchase, but I also learned about why different products are priced how they are. When it comes to a diamond engagement ring, the four main factors affecting the price are the 4 Cs: cut, color, clarity, and carat weight. As I went through my research, I came to the conclusion that we wanted to make sure that the cut and style of the ring was what she wanted within a specific color and clarity that would provide the best value for our money.

For example, going from a .9 carat diamond to a 1 carat diamond isn’t a huge size difference but can be a huge price difference. I wanted to make sure that this wasn’t something we got hung up on. Oval cut diamonds can be much cheaper than round cut since it’s more difficult for the diamond cutters to make round diamonds. There are so many factors that go into it that I can’t begin to explain them all here.

Set a Budget

After you’ve done your online research, and before you ever step foot into a jewelry store, set your budget. By now, you should have a good idea of what it will cost. Remember, it doesn’t matter what your budget is and you shouldn’t compare it to anyone else’s. We’re not worried about keeping up with the Joneses.

If your friend working a similar job to you bought their significant other a $10,000 ring which would make you go broke, then they’re probably broke now, too. If they have a much higher income than you, then good for them. You don’t have the same budgets. Conventional wisdom is dumb, and you shouldn’t set your budget based on how much you make over the span of a couple of months. Pete the Planner wrote a great article about this in 2013 that pretty much sums up how I feel about the “how much should I spend on an engagement ring” conversation.

When setting my budget, I took into consideration my savings account balance and my income to determine what I was comfortable with. I didn’t use any rule of thumb or any conventional wisdom. It was a personal decision based on my own situation. No matter what your budget is, you should be able to find something that your significant other will love. It’s not about the ring, it’s about the relationship. If you can’t find something they’ll like that’s within your budget, then run away. (Remember, you’re not here for relationship advice so you may not want to take that too seriously).

Don’t let the ring end up being a financial burden on you.

Know Your Options

Hopefully this goes without saying, but you should shop around even after you’ve done online research. Even if you, or your soon-to-be fiancée, find something that you love at the first place you visit, you should still shop around. You may find the same exact thing, or something very similar, cheaper somewhere else.

We visited a couple of places and found what Amanda liked at a better price with much better service. The salesperson at one of the places that we visited kept handing Amanda stock rings and expecting me to purchase one of them without providing much education or feedback. The person that we ended up purchasing from worked with us to find the aspects of many different rings that Amanda liked and had a designer compile them all into one ring.

Sure, she could have duped us and made us wait a week while she had this ring in the back, but the final product ended up being exactly what Amanda had described that day. Sales typically comes down to a relationship and how someone makes you feel more than the underlying product or service being sold, anyways. Not only did the salesperson make us feel like she was really listening to Amanda about what she wanted and to me about my budget, but the ring also came in how Amanda wanted it and was a better price for pretty much the same exact thing elsewhere.

I Financed It

Why? There are a couple of reasons.

First, it was a 0% loan.

Second, I’ve set my financial situation up through diligent saving so that I could have bought the ring outright if I wanted to and still had a more than adequate emergency fund leftover in my savings account. But, I’m focused on doing everything that I can to set my and Amanda’s future up for financial success and I like to do everything to the best of my abilities. In this case, the best of my ability is doing what the math tells me is the most optimal choice to make.

I’d rather keep that cash in my high yield savings account where it at least earns a small amount of interest rather than paying for the ring 100% up front. While the interest that I earn on the money in my savings account may seem like a small amount that I shouldn’t bother with to some, I believe that all of the small positive financial decisions that I make like this will add up significantly over time. Having more money through earning interest is always better than having less money through not earning interest, in my book.

Remember, I didn’t finance something that I can’t afford. I could pay off the loan and own the ring outright today, if I wanted to.

Beware The Catch

Jewelers, just like car dealers and appliance stores, offer 0% financing because they get paid good money from the financial institution offering the loan. There’s a reason that the financial institution will offer this compensation to the jeweler, though. They’re not going to make any money off you if you pay off your loan in full using 0% financing. The trick is that if you miss one single payment or don’t pay off the loan in time, you’ll be responsible for paying for all the interest that you would have accrued at the interest rate stated in the contract.

Make sure that you pay off the loan in full before required if you choose to use 0% financing. The minimum payment that is set for you will very likely not pay off the loan in time.

If you bought a $5,000 engagement ring (the average, according to Forbes) and you accidentally didn’t make the final payment on a one year loan because you thought you already paid it off, then you’d be responsible for $819.46 of interest based on the 28.99% interest rate that my financing would charge.

To make sure that this won’t happen to me, I set up automatic monthly payments to have the loan paid off in 11 months, 1 month before it has to be paid off. I like to make personal finance as easy on myself as possible.

Conclusion

Hopefully after reading this you don’t think that I was too analytical and focused on money when making this decision, because I don’t feel that I was. I looked at the decision in regards to what Amanda would like and what would make her happy while trying to keep in mind my budget and what would be best for our financial situation long-term. Buying an engagement ring is an extremely personal decision that could potentially have negative long-term financial implications, if not planned for responsibly.

Make sure it’s a positive decision that will be a blessing to your relationship, not a curse!