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As I mulled over the idea of buying a new Google Pixel phone all the advice I gave my brother--though he never followed--came rushing into my mind. "You don't need to finance all these phones because it adds up." It was only going to increase my monthly cell phone bill 26$. Knowing I was buying a phone for 800$ wasn't a bother to me because it really only reflected a small increase in my monthly payment.
It occurred to me that I think America today loves payments.
I know it makes expensive things more easily attainable, but at the same time payments are what kills your finances, not necessarily debt. I guess one way I look at it is that Debt destroys your future, payments destroy your life. Most people today have a lot of debt, so all their money is spent on paying that debt and nothing is going to retirement/savings. Since we just keep adding items to that debt we never fully come out, therefore we always have something else that takes our money instead of saving. I know to those of us here at SA just because you may have a car payment doesn't mean you are not saving, but for most of America that isexactly what is going on.
As for payments, they absorb our cash flow. When the cash flow runs out everything comes crashing down. Having 100,000$ of debt doesn't destroy your finances(just hurts your net worth), but tying up all your available money into payments will. Most people don't declare bankruptcy because they have too much debt. They declare bankruptcy because they can't support the payments anymore. That's why I am very hard on the need to protect your cash flow, even if it is just 26$.
My brother has 3 phones on payments now. He is trying to get what he needs to finally move out after living with his in-laws for over 7 years (with 4 kids). He knows better, but still went out and added another line for the newer note 7 and gave his 13 yr old the note 5. Along with his wife's Edge plus, they are all on payments. It might not seem like much apiece, but 3 phones equal about 90$ a month on top of the plan. Then we add in Hulu, cable, and other subscription services (the wave of the future), two car payments, and then wonder why we can't get ahead.
I'm convinced most of America is in love with payments. Everything is ok as long as it is a small enough payment. What people miss is that 10 10$ payments are just as dangerous as a single 100$ payment. We just don't make the emotional connection with the smaller payments.
Just some thoughts I had today.
It occurred to me that I think America today loves payments.
I know it makes expensive things more easily attainable, but at the same time payments are what kills your finances, not necessarily debt. I guess one way I look at it is that Debt destroys your future, payments destroy your life. Most people today have a lot of debt, so all their money is spent on paying that debt and nothing is going to retirement/savings. Since we just keep adding items to that debt we never fully come out, therefore we always have something else that takes our money instead of saving. I know to those of us here at SA just because you may have a car payment doesn't mean you are not saving, but for most of America that isexactly what is going on.
As for payments, they absorb our cash flow. When the cash flow runs out everything comes crashing down. Having 100,000$ of debt doesn't destroy your finances(just hurts your net worth), but tying up all your available money into payments will. Most people don't declare bankruptcy because they have too much debt. They declare bankruptcy because they can't support the payments anymore. That's why I am very hard on the need to protect your cash flow, even if it is just 26$.
My brother has 3 phones on payments now. He is trying to get what he needs to finally move out after living with his in-laws for over 7 years (with 4 kids). He knows better, but still went out and added another line for the newer note 7 and gave his 13 yr old the note 5. Along with his wife's Edge plus, they are all on payments. It might not seem like much apiece, but 3 phones equal about 90$ a month on top of the plan. Then we add in Hulu, cable, and other subscription services (the wave of the future), two car payments, and then wonder why we can't get ahead.
I'm convinced most of America is in love with payments. Everything is ok as long as it is a small enough payment. What people miss is that 10 10$ payments are just as dangerous as a single 100$ payment. We just don't make the emotional connection with the smaller payments.
Just some thoughts I had today.
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