Buy now Pay later

The easiest trap to fall into is the one that involves procrastination in paying for something well after the fact. To buy it is to spend money, and in the past it was assumed that one had the money upfront in order to receive the good or service they were aiming for. Today that isn’t necessarily the case and that is more than worrisome, it’s wasteful, and sometimes the fastest road to financial hardship.

Although people can choose credit cards, loans, or other financial motivators as the scapegoat to cover their mistakes, it isn’t as simple. Debt and the self-digging hole it creates is always the fault of the one who submitted to it in the first place. By spending money you don’t have under the assumption you can overcome the interest rates and pay back what was borrowed isn’t as easy as it seems, and can cost much more to repay than the amount that was ever loaned in the first place. The true waste of this philosophy is in paying money to something that doesn’t yield a return.

In normal spending, a legitimate transaction involves money from pocket or bank in exchange for a product or service upfront, and generally the merchant is willing to even lower the price for those who can pay immediately because they don’t have to wait for payment. It’s like they say, that sometimes the best way is the first way. Money exchanged from one person to another is a done transaction. The product is in the hands of the customer, the money is in the hands of the merchant, and there is no third party other than the government taxes that has a say in the exchange. From this point the customer can go on to earn additional money that can be used to buy more products.

In comparison, the person who buys in the present but pays later is subject to interests and potential fees. Even if the item purchased was only $100.00, if the credit card comes with an APR of 15%, then over the course of the year, they could earn $15.00 in addition to the repayment, as well as late fees or other service charges. If this back payment eventually adds up to a net of $150.00 then the cost of that initial purchase increased by 50%, which isn’t worth it.

Why pay the $150.00 when you might only pay $90.00 the other way? That is a good question.