I have a pretty strict view of debt. It’s bad. Even in my most spendthrift years, I never let myself carry a balance on my credit card. I use it all the time for the points, but I’ve never bought anything that I wouldn’t be able to pay off at the end of the month, with one exception*. This lesson was beat into me at an early age**, since my parents felt the same way. Actually, forget the years where I spent the most, I’m kind of more proud of the fact that through all my broke-ass 20-something years on my own working in customer service, I never got into debt of any kind before I bought my first condo. I’m almost terrified at the thought of debt ballooning out of control, so I’ve never given it any sort of entry into my life.
Now, I know that a lot of people don’t feel this way. Carrying a balance on your credit card is a way of life. You need a computer now, so you buy one on credit and pay it off over a few months. Christmas presents will be paid off by March or April. BBC News just had an article yesterday about how quickly the concept of “Buy Now, Pay Later” took over the world.
With big purchases, I kind of understand the idea of splitting up the payments over a few payments, especially if they’re unexpected. I also get that unpleasant surprises can happen during the month, and while (I assume) most people do plan on paying for all their normal day-to-day purchases off at the end of the month, sometimes life gets in the way and they need that extra time.
However, this is something different. Affirm Financial is a new company that intends for you to purchase everything on a payment plan. The assumption is you don’t have the money for something right now, so buy it and take it home anyway, while making payments on it for months to come. You don’t pay it all off at the first opportunity- you are on fixed payments that include 10-30% interest. What are their three main areas, according to that article? Homewares, travel, and fashion. Three categories where the vast majority of purchases are completely unnecessary.
Why does anyone think it’s a good idea to go into debt and add a 30% surcharge to everything you buy in order to attain instant gratification? We live in a world where the majority of households live paycheque to paycheque, and yet they want to increase the cost of all their discretionary spending by 30%?
That article even features people trying to rationalize the service by saying it helps you budget. You might not think you can afford a $500 pair of boots, but you can swing $75 a month for 8 months, so it turns out you totally can! Except that you pissed away an extra $100 on those boots in interest, of course. You are literally stealing from your future self in these scenarios because you can’t stand the thought of having to save the money and spend it later, even when the end result is you end up with those boots AND an extra $100.
If you don’t have the money to pay for something in full, there are only three options. One, don’t buy it. Problem solved! Two: Buy it now, pay for it later, and pay extra for the fact. Three: Put that exact amount of money into savings each month that you’d have to pay Affirm, save until you have the full amount with NO penalties, and then buy it. Again, we’re not talking about cars you need for work or food to feed your kids. Their three biggest areas are homewares, travel, and fashion. With the possible exception of fridges and stoves, nothing else you want to buy from those categories can ever really be considered necessary in any way. Do you have your retirement all planned out? Is your mortgage paid off? Is there nowhere else in your present or future life that could use that money? Unless that’s the case, there is no reason whatsoever to waste your money on payment plans for a fucking vacation or a fancy dress.
*When I applied for my first credit card at age 21-ish, I was refused since I had no credit history. I needed a laptop at the time, so even though I had the money to pay for it in full, I bought it with the shortest period of financing the store offered (3 months) and paid each installment as soon as I could. 4 months later, I applied again for the same no-fee credit card and was accepted.
**Not literally. My parents loved me and never beat me.