No Payment for 90 Days – Delaying Ownership of Things You Cannot Afford

Over the past several weeks I’ve been receiving a number of notices from retailers (furniture stores, car lots, etc.) offering me “no payments for 90 days” promotions. I used to jump at these opportunities, but now I shrug and toss them in the trash.

What those notices often fail to point out, except in the 4-point italicized font at the bottom of the back of the postcard, is that during the 90 days of no payments they are still accruing interest on your balance. You still owe a debt, and it gets more expensive every day.

This is like telling an overweight person, “Wait 90 days to start that diet, and just eat whatever you want to until then.” At some point, the dieter and the borrower, have to face their battle and start working things off. The problem is, in three months, they now have a bigger problem.

Most of these types of “creative financing” arrangements are offered to consumers who refuse to face one single reality – they can’t afford to buy whatever is being offered. That’s it; you can’t afford it. If you don’t have the cash to pay for something outright, or when the bill comes due at the end of the month, you simply cannot afford to buy it.

Alternatives to “No Payment for 90 Days” Offers

Save Money. Open a savings account if you don’t already have one and get started saving towards the item you would like to purchase. In 90 days, you will either have enough money saved, or decide the item isn’t worth three months of your savings.

Be Content. Let’s face it, most “No Payment for 90 Days” offers are made on things we can probably live without – new cars, new furniture, new jewelry, big screen televisions, etc. My grocery store doesn’t offer 90 days same as cash on meats and produce. The gas station will not let me start an interest-free tab. So, chances are, whatever it is you are thinking of buying can probably wait.

You can keep sitting on your old sofa (or buy a yard sale sofa, like we did).

You can live with your current television, and if dies, can live without one – lots of people do it.

If your car dies, buy a cheap one and save up the money to buy a more expensive one with cash down the road.

Of course, it is much easier to walk into a showroom and pick out something brand new with a big price tag and a financing agreement to go with it. But remember, by delaying the inevitable bill all you are doing is tying up future earnings in debt payments.

Who knows what your life might be like 90 days from now? Could you survive getting laid off? What if you get sick, or a loved one falls ill? What if your car dies the week after your big screen television arrives. Trust me; these things happen.

I’m not advocating you sit around and consider the worst case scenario, but I am advocating a practical approach to managing your finances and acquiring new stuff. If the aforementioned things do happen, you’ll be better off minus a bunch of debt payments on things you don’t own.

Pride of Ownership Goes Up When You Actually Own It

Here lately, I’ve taken a hard look at the things I own. Do they bring me joy? Do they add quality to my life? I find that the things that were acquired with my own money, not with debt or a gimmicky financing arrangement, often bring me the greatest joy. Why? Because I don’t resent them, like I used to resent a financed Silverado, and a bedroom suite purchased on a credit card.

When I make the conscious decision to part ways with my money in exchange for some item, I want to own it as soon as I leave the store. This way I can enjoy it for its intended purpose without worrying over how much it cost, or how I will afford the monthly payments.

When it somes to stuff, own it or get rid of it. That’s my only two options from here on out.

Comments

  1. I lamented about this not too long ago too – I miss layaways. This used to be a way to purchase an item when you didn’t have enough money to buy it outright. You’d take your merchandise to the “Layaway Counter” at the store, where the clerk would set your item back and take a down-payment. Then you’d go back from time to time to make additional payments until you had the item paid off. Only then did you get to take your new prized possession home.

    But now just about anyone with a pulse can get a credit card, regardless of their ability to repay the lent money. So, people find some goodie at the store, swipe their plastic, and away they go with the new prized possession — with little or no thought about whether they can actually afford (or need) the item. Sure, we all like the immediacy of getting some great new thing right now, but at the same time, I believe we lose a lot by succumbing to those impulses.

    This isn’t about whether people should have credit or not — it’s about self-moderation and the value of delaying gratification. Deferring a purchase can give you a chance to evaluate “want” versus “need” and once you’ve distanced yourself a bit, often you’ll find that the need just isn’t there. Back when credit cards weren’t so prevalent, anticipation made the end result all the more rewarding.

    • Layaways were a good concept – you didn’t get the item until you paid fully for it. I doubt too many folks understand that concept at all anymore…

    • We can do “self-layaways” though, just by setting aside money each month or week until there’s enough for what we want to buy. There’s a small chance that the item will no longer be available, but what often happens instead is that the item is either available for less, or we forget we even wanted it.

  2. I agree. And even if you have the money set aside to pay for the item, the hassle factor for that few, free months of interest is high. There are forms to fill out, credit checks to have run, and you have to make sure you repay within the 90 days or you’re charged all of the back interest. Not worth it.

  3. Better to wait and save up for it – by the time I have the money saved, I often find I don’t want the item any more or can live without it.

  4. Overall, I agree with this. I’d rather wait til I can buy something than pay interest on the purchase. I do use credits, but I *mostly* pay them off every month. The exceptions are my Home Depot & Best Buy accounts, which have no interest for 6-12-18-24 months, depending on the offer AND NO INTEREST EVER, provided you pay the balance in full before the deadline. I use those offers at times, making sure to pay off the balance before the deadline. It is especially helpful for home repairs. I can use their money for free, while keeping my money in savings. I always pay enough monthly to make the pay off deadline. I don’t charge something I couldn’t pay for otherwise, it’s just convenient as I keep my cash in reserve. Sometimes its not reasonalbe to wait on a purchase, as when my son’s college computer died and he had to have a replacement… He paid part in cash, put part on my Best Buy card & is paying it off monthly.

  5. This is all so true. I personally would be very unhappy without a TV, however, if I absolutely NEEDED a TV, I know I could get one for 50 bucks.

  6. I believe that the only time it makes sense to take advantage of one of these offers is if you have to replace a broken item such as a refrigerator or washer/dryer.

    Even then, extreme care must be taken not to exceed the “interest free” period which is not really interest free at all. The interest in accrued and becomes payable if the entire charge is not paid in full on or before the the free period is over.

    I always recommend that folks pay the charge off at least a week in advance of the end of the complimentary interest period.

    – Gaye

  7. Regarding those things we can live without, I’m reminded of a “trick” which I used, many years ago, to control my purchases. I’d drive to a shopping mall, park at the far end of the parking lot, and leave my wallet in the car. Then I’d walk into the mall to look for what I intended to purchase. As my wallet was back in the car, in order to make a purchase, I’d have to walk round trip to the far end of the parking lot — perhaps fifteen minutes or more. That fifteen minutes served as my “cooling off period.” I’m sure it diminished the number of purchases I made… and thus the amount of money I spent. Bill

  8. Hi Jason,

    Thanks for this post. I think a lot of people act out of impulse and that it’s important to take a step back to listen to the rational-voice that we repress far too often. As someone with significant student debt, I’ve committed to never procrastinating payments again. I rarely use my credit card, and I spend less than what I earn — no matter what I’m making. I’m much happier this way and never in-over-my-head. Thanks for reminding us to stay sane.

  9. Hardly seems worth it for 90 days. Anyone who would bother with that is basically sticking their head in the sand. Buy it with a credit card near the beginning of the card’s billing cycle and that’s 60 days right there, with less hassle and risk. (Only the part you don’t pay off gets converted to an interest bearing loan, not the whole thing retroactively.)

    The only situation I can even conceive this being ok is maybe if you NEED something (like a daily use appliance), need a few days to get the money out of your emergency fund, and refuse to own a credit card for whatever reason.

  10. In all fairness, I hafta admit that i do use my credit card(s) daily. I pay for as much as I can with my cashback credit cards. Both of these earn dividends that I get in the form of checks – yup, actual, usable money. When I’ve maxed out on the amount of dividends I can get back from Citi, I switch to the AmEx for the remainder of the year and have been using this cashback strategy for many, many years. But…

    The trick is that we never – EVER – carry a balance. Seriously. Not once in 15 years. We ONLY put on credit card what we have cash to cover immediately. So, I playing the banks’ credit game to get the cashback rewards (airline points are – IMO – for suckas!) but I never give ‘em a dime for interest.

    • I have 1 reward credit card, which I use for large expenses, provided I can pay it off that same month. I do not believe in paying interest. Recently I realized that my rewards total over $300 on that card, for which I’ve never paid a cent in interest. Got my attention, and I’m using it for more daily purchases, still paying it off each month!

  11. Great tips! I love how eloquently you put even your most blunt points. “In 90 days, you will either have enough money saved, or decide the item isn’t worth three months of your savings.” So true! Thank you for sharing.

  12. You’d be amazed what you can live without. We haven’t had a working television for over two years. It leads to more reading, spending time with family. It’s actually a good thing to NOT have the latest…fill in the blank. And, it’s insurance for your future to actually try to live within your means.

  13. Im all for interest free financing, no interest for 90 days, 6 months, a year or more. It’s free money provided you can pay it off in the specified amount of time. But this 90 days with no payments is ridiculous, it amazes me that someone wouldnt want to start making controlled monthly payments right away…people should not be paying for things they cannot afford at that moment.

    • Hi, Justin…

      Yes, I agree with your statement, “People should not be paying for things they cannot afford at that moment.” While that statement is true — they “should not,” remember that many people buy (and at time pay for) things they don’t need at that moment (or ever). Sadly, that seems to be “the American way.” Perhaps the current economic downturn will modify that habit. Bill

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