There is no free lunch.

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"I've been rich and I've been poor but independently wealthy is where it is at."

Yes it is Debt the question is can you get by without the new furniture have you thought of Garage Sales or Craigs list, Free cycle people are always getting rid of old furniture and you are not adding to your debt in buying something that maybe out of your budget at the moment. Life happens you are stuck with a payment then something else Happens. My favorite example was totaling my car while 7 months pregnant. I wasn't expecting car payments along with the decrease in income in becoming a SAHM if has made finances uncomfortably tight so if you can get by with out the new furniture then you should do so.

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Kimberly Proud Mommy to Bethany Rose April 2006

I would be sure to read the fine print prior to signing the contract/note on a "deal" like this. Lots of times the fine print will say that if you do not pay off the entire balance by the end of the 5 years or 12 months etc... you will be responsible for all the interest that you thought you were not being charged, when in fact the interest was deferred not eliminated. The interest rates that retailers charge are usually outrageous. I worked as a credit counselor as well a workout specialist for a very large bank for years so I have seen and heard of all types of these "deals" going very bad. They generally have a few unexpected surprises.

To answer your question of this being debt or savings, it is debt. You are financially obligated to pay the creditor every month.

I agree that it is a debt. I also think you need to be careful sometimes with all this "free" money because it can quickly sink you if you cannot meet the monthly minimum payments to pay the debt back prior to its due date.

We have used this option at Best Buy often -- I will take an interest free loan -- and never been burned. I make sure to pay the debt back in full PRIOR to the due date and all accrued interest is waived.

Right now I am weighing my options on a new oven. Ours just went poof. I have the stimuls check to cover the cost in full - BUT I want to save the money for my EF. I can get 24 months same as cash at Best Buy and I could easily add the minimum payment to my budget. I think that is the option I will go with at this time. Yes its a debt, but I have the money sitting in my EF to cover it at any time.

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Grace

Wife to Stoney

Mommy of Sarah (8.5), Hannah (7), and John(5)

Yes, it's debt, plain and simple. When you're doing a balance sheet it goes on the debt side, no doubt about it. That said, I think if you're very, very careful and have the cash to buy what you want to begin with you can use programs like this to your advantage (read the fine print and make sure there are no fees or additional costs for doing this).

We did this once even though we had the money to pay for what we were buying (appliances, in our case). Instead, we took the "free" loan and kept our money in savings where it could generate interest. We did inquire if we could save by paying cash and the answer was no. At the end of the term, we paid our bill on time for the same amount we would have had to pay if we had cash the year prior, but we also had a little bit of interest saved.

Yes, any debt can affect your credit rating which is something to consider. If you have additional debt, you shouldn't be doing this or buying whatever it is in the first place unless it's a necessary item, like an oven or refrigerator (furniture or electronics aren't necessary, IMO). For us, we didn't worry about an affect on our credit rating because our debt to available credit ratio is very low and we've always been able to get loans when we've needed them.

NOTE: This strategy is best saved for those who are self-disciplined enough to not touch the money while it's accruing interest, you have the money to begin with, and you pay the bill ON TIME.

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I have not read the other responses, but it is a debt. I take advantage of these offers, but I only buy when I have the money and can pay it outright! If I can't do that, I don't buy the furniture no matter what the plan they have. I will open a short term CD, figure out the amount I need to put in, add the interest I will make and then pay it off on time when the CD matures. We probably have saved $1000 doing this over the years. Right now we have a short term CD for our a/c we put in last year with this very thing.

ETA: I posted right after Kim, looks like. She pretty much gave the best advice and what I was trying to say as well.

Exactly!

I also agree with Kim that new furniture and updated electronics are "wants" not "needs".

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Attaining financial freedom is like eating an elephant . . . it takes one bite at a time.

Thanks for all the replies ladies!
I don't totally agree with paying more in the end. If you're on time and pay more each month, you're ahead of the game. In fact, we saved money on four of our furniture pieces since they were on sale.

I plan on paying more than the minimum on the payments and project to be paid off in 2 years instead of 5. With hubby's overtime checks, it'll reduce the time even faster.

What's done is done, but I bet their won't be a next time because I have an underlying guilt/anxiety over it. I guess I'm feeling like a bad Dave Ramsey-ite and a not-so-good Forget the Jones' example!

I just thought since I can make the payments (plus extra), with no interest to boot, I'd keep my lump sum in the bank because I just like having extra besides our emergency fund.