There are many opportunities to put ZERO down on different purchases these days. Zero-down mortgage. Zero down event with zero payments for a year at your local furniture store. Zero down event with zero payments for a year at your local auto dealership. This is great if you are still planning and saving for your purchase along the way and paying more than minimum payments when you begin payment.

Having a zero down mortgage leaves more for you to pay off in the long run and therefore a greater amount for you to collect interest on. So when there’s a greater amount of interest collected that means you will pay an even greater amount for the house in the long run. So, for example, if you purchase a $200,000 house, put zero down and thus get a mortgage for $200,000, a 25-year term, with a 5.0 interest rate, you will end up paying $350,754 in total at the end of the 25 years.

But if you purchase the same $200,000 house, put $25,000 down and thus get a mortgage for $175,000, a 25-year term, with a 5.0 interest rate, you will end up paying $306,909 in total at the end of the 25 years. That is a difference of $43,845 less the original $25,000 you paid down, to begin with, leaves an extra $18,845 extra you end up paying by not having a down payment on the house. You can find mortgage amortization calculators at Yahoo Mortgage Calculator or Bankrate Mortgage Calculator to calculate things for your specific numbers. I like using a template from Microsoft Office for mortgage amortization.

There are different outcomes for other cases like purchasing a piece of furniture/vehicle when they have no money down events with no payments for a year. Often there is still interest charged on the amount to be paid and that interest continues to accumulate for that whole year that you are not paying for the item yet. If you don’t want to pay more for the item in the long run, take the cost of the item, divide it by 12 for how much you should save each month, place that amount plus a few dollars more in an account (that is hopefully gaining more interest than what you are being charged). At the end of the 12 months (the year of no payment) pay off your item in total.

I make it a policy to live without the item if I can’t afford it right away and save up until I have enough to pay for the item in full. This ensures that I don’t have the debt hanging over my head and wondering if I will have enough to pay for my purchase when the payment comes due. As life often goes, unexpected things come up. We don’t usually take the extra year to save the money to pay for the item in full when the payment comes due, or something major will come up that the money will be needed for and so the money won’t be available when the payment comes due.