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Is this debt ?

December 6th, 2009 at 01:01 am

Ok sorry if the answer to this is obvious:

If you want to get a new TV and you don't have the cash upfront and you have 2 choices:

1. Save the money for a year and buy the TV with cash.

2. Get the TV now on 12 months interest-free credit.

Is Option 2 considered to be debt ? I mean yes it's a monthly payment for 12 months and yes you OWE that money to the store.

But from a strictly personal financial budgetary point of view isn't Option 1 exactly the same as Option 2.

Both ways involve setting aside 1/12th of the Cost of the TV for 12 months. Only Option 2 allows you to get the TV now.

Now I would consider an interest-free loan for a big ticket item like a car to be debt. But for a relatively small ticket item like a TV ?? I'm not sure... The monthly payment wouldn't be a budget-breaker.

Emmm....Any opinions ?

Posted in Uncategorized | 11 Comments »

11 Responses to “Is this debt ?”

  1. disneysteve Says:
    December 6th, 2009 at 02:02 am 1260064963
    1260064963

    Is it debt? Yes, absolutely. It is money that you owe to a finance company (not the store actually).

    Does that matter? I think it does in a philosophical way. It means you have purchased a non-necessity item, a "want," that you couldn't actually afford. Regardless of the size or cost of that item or the interest rate on the loan, I think financing wants is a bad idea.

    There are other options besides the 2 you list.

    3. Buy a smaller TV that you can afford now.
    4. Buy a used TV on craigslist or at a thrift shop or some other place.
    5. Go without a TV until you can afford to pay cash for the one you want.

  2. debtfreeme Says:
    December 6th, 2009 at 04:20 am 1260073210
    1260073210

    I believe it is debt. What happens if you can't save all the money to pay it off by the due date? then all the interest plus other penalties would be added in.

    In my book debt is debt even if it is as zero %.

  3. beawealthywarrior Says:
    December 6th, 2009 at 06:22 am 1260080520
    1260080520

    No matter how u try to justify it, yes it's debt. Like debtfreeme stated, what if life happens and you don't have it paid in full on time. I say save up for it or find another way to make it happen without going into debt.

  4. Apprentice Bliss Hunter Says:
    December 6th, 2009 at 12:50 pm 1260103851
    1260103851

    Thx Guys !

    I agree with you all... I think I was just playing Devil's Advocate with myself - isn't it strange the tricks the human mind can play on itself ! lol

    Thanks for putting my back on the straight and narrow ! :-)

  5. monkeymama Says:
    December 6th, 2009 at 03:31 pm 1260113507
    1260113507

    It's debt. I would personally only do #2 if I had the money in the bank, and wanted to save the interest for a year. Which I have done (with vehicles and credit card balance transfers), and haven't considered "debt." I am sure others would consider that "debt," but just saying I don't. It would be a different category of debt, in my mind - a harmless one, anyway.

    When you borrow money you don't have, it's most certainly debt!! Then you are gambling if you can pay it off in time, etc.

  6. Ima saver Says:
    December 6th, 2009 at 04:03 pm 1260115429
    1260115429

    Yes, it is debt. However, I did this once with furniture just to make a little interest. However, I did make sure to pay it off in full one month early!! One minute late and you owe a whole year's interest.

  7. wowitsawonderfullife Says:
    December 7th, 2009 at 02:48 am 1260154116
    1260154116

    Make sure you read the contract. We had one once but they had an admin fee and interest on it starting from day one!

  8. baselle Says:
    December 7th, 2009 at 03:32 am 1260156735
    1260156735

    Its debt. A super easy way to tell the difference.

    If your income was cut off completely, and you didn't make the necessary payment, would a collection agency call?

  9. Broken Arrow Says:
    December 7th, 2009 at 02:49 pm 1260197364
    1260197364

    There is also a pragmatic aspect to this.

    No doubt that in 12 months, there will be a better TV, bigger TV, or the same TV but cheaper.

    Either route you choose, you will have the money spent or saved in 12 months time. I suppose it's just a matter of how badly you need one right now.

    I put off my own TV purchase for as long as possible before I finally bought it, and got a small one for a 33% savings.

    Some day, I would like to get a real set (40" or bigger), but I'm waiting for that as well.

  10. Apprentice Bliss Hunter Says:
    December 10th, 2009 at 12:17 pm 1260447447
    1260447447

    Me too BA...

    I've currently got a 14" that I've now decided will do me just fine until I've the money saved up.

  11. Jerry Says:
    December 12th, 2009 at 12:15 am 1260576924
    1260576924

    I love that this site can lead to such straight-shooting responses like this! Yeah, it's debt. The companies will try to couch it as something else, but the fact remains... you owe on it. Better to scrape by on something smaller and cheaper, and save up. That thing will be a lot cheaper in a year, and you will have the added emotional insurance that you didn't cave to the advertisers! =) Good luck.
    Jerry

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