Goodbye Ashley...
0% down, 0% interest for 72 mos! Don't worry about the price- your payment will only be $150/month!! That sounds like an amazing deal, for an expensive, real wood bedroom set right! Did either of us have the money to buy the furniture in the first place? Nope! It sounded like a great idea to us at the time! Aaron was just getting settled into his new house and he desperately "needed" some "grown-up" furniture! He was still sleeping on a double bed, after all! What grown-adult man who made a ton of money NEEDED to be sleeping on a tiny "double" bed! I definitely didn't help! "Yeah, it was the first thing I bought when I got my "real" job -- in all reality, I did the same thing, I financed my entire bedroom set, 0% down, 0% interest for 48 mos! It is these types of "payments" that have kept my money out of my pocket my entire adult life!
To make matters worse, after Aaron had been making the required payments for a year, the card issuer increased his credit limit and he decided it was time to replace his saggy entertainment center with real wood as well. We had been dating for a while at that point and had even gone through Financial Peace University together, and still bought the furniture thinking "We'll pay it off when we're married and our income goes up." It was one of those furniture stores where the posted price is vastly inflated and the manager "works" with you to "get your payment lower" by adjusting the final price and the loan terms. We started out trying to talk about total purchase price rather than payments, but just like Dave Ramesy says not to do, we ended up deciding based on payment terms. The new payment was only $190- totally worth it, right? Another year went by, and again the needle barely seemed to move...
Well, today we paid off our furniture! Like we talked about last week in our post about bi-weekly pay, under a bi-weekly pay regime there are two months a year where you'll get three paychecks in the same calendar month. April is one of the "magic months" for us, so after tithing, we turned our checks into an extra avalanche for our debt snowball. In one day we wiped out the entire amount and stopped 4 more years of cash flow draining payments.
Have you fallen for the hype? That's totally OK; Dave calls it stupid tax! Hahaha -- we all do it at some point in our lives! It's all about taking the right steps to get out of it and move towards not ever paying stupid tax again (at the end of the day at least we didn't pay interest on it?! at least there is SOME bright side, right?) -- but it would have been better to shop around and find a good deal on the furniture or save up and shop an estate sale! I have grown to love finding treasures at estate sales, they just don't make furniture like they used to and you can find some great stuff at some of those sales!
From now on we will be paying cash for all of our future furniture purchases and we definitely won't be paying FULL PRICE for them! Nobody wants to pay full price OR be paying for them for several years! That just seems silly! Thinking back to when we made the "deals" at the furniture store, the total purchase price seemed entirely based on what kind of financing we chose. When we added the entertainment center, we could only get 0% if we chose a 12 month term. Anything longer at 0% would have resulted in a higher purchase price! Imagine what kind of real DEAL we could have driven if we walked in with a fist full of CASH!!
Until next time...Happy Budgeting!
<3 C&A