BestBuy............"Big Deal"

[Fluffhead]

Re: BestBuy............"Big Deal"

Ehh, I'm not sure that's the smartest thing to do. Never rely on money that you don't yet have.

Personally, I've never done one of these deals because I would rather pay it off the minute I buy it. I'm just that way. I never purchase anything if I don't have the money in hand (except a car or house obviously). If it's on my CC it's paid off every month (mainly used for convenience so as to not carry wads of cash around or checks).

The way I see it, you never know what will happen in life. Say someone does this and says "I'll pay it off 2 years from now after I get a bonus". Great, what happens if said person loses their job? What happens if said person has a health problem and has huge medical bills to now pay? What about something happening to their house that they need to spend money on? You just never know.

Example - My air conditioner failed about a month ago. I thought it would be a small $200 or so fix, but winds up I need a new unit as the compressor is toast. Now I'm out $2200 for a new unit that I wasn't planning on getting. Sometimes these things happen. It's just good to always have a stash of money saved away for when they do happen.

Ok, enough rambling for me.

Time for accountant mode! I'm all about the time value of $. Can I purchase that $3,500 TV right now straight up cash? You betcha. But I can also use my funds today and invest and earn on that $ I might have paid for a TV and the whole time pay 0% on my loan.

I do the same thing with my student loans. Their at an obscenely low interest rate that it's pointless to pay them off early other than having the comfort of one less debt hanging over me. I'm using excess cash for retirement savings.

Essentially, your $ is worth far more now than it is 3 years from now due to inflation, consumer price index, yada, yada, yada.

But I do realize this isn't the way most of America works. Most are leveraged up to their gills because they're not so bright and think luxury items are necessities.

[mjb2124]

Re: BestBuy............"Big Deal"

Time for accountant mode! I'm all about the time value of $. Can I purchase that $3,500 TV right now straight up cash? You betcha. But I can also use my funds today and invest and earn on that $ I might have paid for a TV and the whole time pay 0% on my loan.

I do the same thing with my student loans. Their at an obscenely low interest rate that it's pointless to pay them off early other than having the comfort of one less debt hanging over me. I'm using excess cash for retirement savings.

Essentially, your $ is worth far more now than it is 3 years from now due to inflation, consumer price index, yada, yada, yada.

But I do realize this isn't the way most of America works. Most are leveraged up to their gills because they're not so bright and think luxury items are necessities.

I think you nailed it with your last sentence. Most people wouldn't do that. However, I understand what you're saying and I think it's one way to look at it. You could also do both. Pay off the TV initially and also set money aside for retirement. I figure the money that you'll earn after the initial TV payment can be stuffed into an IRA or Roth IRA or 401K or Money Market etc....

The way I see it, something like a TV purchase or 360 or DVD player is an extra. It's cash (ie: spending money) that's 100% independent of my retirement savings and high interest bearing accounts - I like to keep the 2 seperate. Typically I have it in a lower interest bearing account and it's used to pay for these type of things. If I don't have the money in that for these type of things, I don't buy them until I do. That's just the way I do things. Might be different for some, but it works well for me.

[jmw1137]

Re: BestBuy............"Big Deal"

I am another big fan of deals like this for some of the reasons already stated. Basically, if you're smart enough and can afford to pay it off in the allotted time there's no problem. My wife & I pay for 95% of stuff with a credit card and then pay it off every month (or by the end of the term for deals like this). This frees up cash to be in our interest earning accounts and we earn a ton of frequent flyer miles by paying for almost everything with the CC.