Well that didn't last long did it... :( Fortunately, this isn't thousands of dollars like my student loan debt. This is $6,909 for furniture. Did anyone ever tell you that furniture is expensive? It's pretty crazy expensive. I have been saving up for new furniture and I have about $3,000 saved.
Now let me tell you why I am in debt. I went to look at furniture around Thanksgiving to take advantage of the early Black Friday sales.. I saw a few pieces that I liked so I asked the sales associate to give me an estimate of the cost for all of the pieces that I liked. It was over $8,000. I told her I could pay in cash and asked what kind of discount I could get. I believe she quoted me 5%. I said that wasn't much and she immediately responded that if I agreed to do 1 year interest free financing I could get a 20% discount. I asked if I could have the 20% discount if I paid in cash and she stated "no" her manager would not approve that. I opted not to continue to haggle and decided instead to do the 1 year interest free financing. My furniture was delivered right before Christmas, and, as a result I am now $6,909. Well technically, I am $5,909 in debt because I made a $1000 payment a few days ago when the amount finally showed up in my new debt account.
I have until January 2018 to pay off the full amount to avoid the interest charges. Interestingly, my minimum payment was only $222. I plan to have the entire balance paid off no later than April of this year. This is simply to allow me to finish off my 2016 contributions to my Roth before April without having to pull money out of savings
So I will temporarily have some debt for the next few months for the convenience of getting a 20% discount on furniture and holding on to some cash for the time being.
I realize this is a result of the research that financing companies, etc have conducted which show that most people will not pay off the debt within 1 year and the company will make way more than the 20% discount that was initially given.
It's a bit sad that cash is no longer king of negotiations. We've been in the market for a new car, but no place is interested in negotiating a better price when we mention having cash. Yet if we finance (low %, but not free), we can save thousands. I know we could just pay off the loan, but it is irritating nonetheless. Dealerships and other businesses seem to get a kick back from the finance companies, so they push those hard.
ReplyDeleteIt really is sad to know that handing over thousands of dollars in cash is no longer enticing to anyone. It's cash, in hand, right now! Sigh.
DeleteGet that debt paid off. Reading your blog, I'm sure you will! We just paid off one of these "no interest no payments for one year" debts. Glad not to be charged that interest. We have vowed never to take on new debt.
ReplyDelete