The True Cost of Financing

My husband and I were recently out shopping for a new mattress. Up until then, we had been using his childhood double bed. While it did the job, we were wanting something a little bigger (he likes his space) so we were in the market for a queen bed. (We didn’t discard the old bed; it will be used for kids down the road.) As we checked out the various mattress stores, I started to notice one thing in common with all of them; they all had financing options available.

I pointed out the sign to my husband and chuckled “is financing a mattress a real thing?!” Honestly I didn’t know such a concept existed. The advertisements made it seem compelling to buy a mattress that costs as much as a car. After all, they claimed that you spend 1/3 of your life in bed, so you deserve the best mattress possible! Even if that meant working unnecessarily to make down payments on a mattress.

Later that afternoon I heard a commercial on the radio offering “great” rates for financing furniture. “Get the style you want with no money down until 2020!” And again I was astounded. The things that can be financed nowadays....

Today, we are truly in the land of plenty. Want something now but can’t afford it? No worries, you can finance! With great financing options available, we swear it won’t cost you that much extra in the long run!

But financing isn't a good idea. Here is the logic plain and simple. Unless it is a house, if you can’t pay cash for it now, do not buy it at all. This includes vehicles (YES- vehicles), furniture, cell phones, whatever. Want to hear of some crazy things that people have financed? Here are a few: pets, Christmas presents, and clothes. Maybe you are guilty of some of these things, and that’s alright (if you are willing to change). But I am here to tell you that financing these kinds of expenditures is called living beyond your means, and that is a sure-fire way to never achieve financial independence. Anytime you finance anything, you are ALWAYS going to pay in the long run more than what it is worth. Are you willing to fork out more than something costs just to get it now?

So keep that in mind as you blaze down the path to financial independence. If you can’t afford the junk now, it is best you don’t buy it at all. Is it worth you working extra hours and years of your life to have luxury item X now? Probably not. Less consumption=better finances= Better Lifestyles, Greater Planet.