I heard a disturbing fact about this Buy Now, Pay Later concept on a podcast I was listening to earlier in the day. A young lady was spending $1100 of her $1600 bi-weekly paycheck towards Klarna, AfterPay and other services because of the “Easy Payments” she thought were a good deal. The interest alone was around 30%!
Retailers are implementing this strategy to increase sales. Do not give in to the gimmicks! Make a plan for your money for the month (budget) and stick to it. Your financial goals are worth way more than these payments that are sucking the life out of your largest wealth building tool – your income. You work too hard to buy something now and pay for it later, literally. If you do not have the cash or means to pay for an item or service up front, then you have no business purchasing the item or service.
Where else have you seen buy now pay later? Do credit cards ring a bell? Credit cards not used wisely can be a huge detriment to your financial success. If you do not have the self-discipline to regulate what you spend your money on, this can spiral out of control really quickly. You will feel the pain of buy now, pay later. And you will pay.
What about layaway? Anyone ever actually placed a large item on layaway making small payments until you could afford to take it home? These strategies that retailers come up with are stifling paychecks everywhere. We need to take a step back, think about the purchase from a factual viewpoint and not an emotional view, and really think if buying now and paying later makes any financial sense to your situation. For 80% of the Americans that are living paycheck to paycheck, it doesn’t make any financial sense.
Budget, save, and spend your hard earned money wisely. Give an assignment to every dollar that you expect to make. Write it down on paper so you can have the freedom to spend once your basic needs are covered.