So, the Raymour and Flanigan furniture store is advertising an offer that's 5 years, no interest accrued, low monthly payments so long as you pay off your bill within the 5 year time frame.

Is this considered a debt? I look at it this way...if you were going to save up for the furniture each month and just purchase it with what you've saved over a 5 year period, isn't it the same thing. Except with this offer, you get to have the goods while you pay for it interest free. Of course, you have to be really certain your monthly budget can handle the extra minor payment and pay it off before the 5 years is up. With this offer, you can pay a little each month, enjoy the merchandise and keep the lump sum money in your account instead of paying a lump sum and depleting your savings.

Any thoughts on this type of deal? Would Dave Ramsey approve?

I would say debt because the amount owed would likely show up on your credit report and unlike savings where you can stop funding at anytime, you are obligated to pay the balance.

Actually, we did this.
We "needed" a TV and Best Buy had a 24 month no interest on electronics offer. We purchased it and our payments should be about $75/month to finish before the 2 year frame. We're paying $100/month to rid it quickly. I think its a lot better, its worked for us in that case. Our first vehicle was purchased under a 60 month 0% interest period through Chevy. It was great and we felt good doing that. I say as long as you're not biting off more than you can chew, simply because the 0% offer is standing, its all good. We're steering clear of major purchases, aside form our home & new vehicle for a while. The TV will be paid off in a little while.

__________________
You must be the change you want to see in the world ~ Gandhi

Technically, it is new debt. You do not have the ability to change your mind before you have to send in the payment since you already have the merchandise. You are stuck with paying for it

If you saved up for it, you can change your mind up to the point of handing over that cash. With all that cash in hand, you may decide that you do not "need" said merchandise.

Adding, Dave would not approve. He says NO NEW DEBT! He would say that too many things could happen and you may wind up paying all that interest. He would say to pay cash for it in advance. Actually, he may question if you even need it, but he would definately say no to financing it, even if it is 'interest free'.

If you're in need of the goods, take advantage of this great offer. You're gonna do it anyway, I'd rather keep my EF funded and factor in the payment of the new loan into my budget. JMO

__________________
You must be the change you want to see in the world ~ Gandhi

It's a debt. But a pretty good deal if you get it paid on time. Especially if you consider, in the five years it would take you to save up, the cost will be going up.

Here's another idea: Since it's costing the furniture company money to offer this, you can try asking for a discount if you pay cash. This has worked for me in the past.

IMO...any time you purchase something BEFORE you actually have the money it is debt...bad debt that is. Pay off all your currant debt, save for the furniture and then get the furniture. that is what I would do.....nobody dies or goes hungry if your don't have new couches.

__________________
Illini Bob's wife....mom to 3 little chiefs

I heard him talk about this very subject on one of his shows a while back. He said "No! Run! If you play with snakes, you're going to get bit!". He explained that if the full payment is not made on time (they won't remind you) and posted on time (they often deliberately post them late even if you mailed it on time), not only do you have to pay the interest, you have to pay all the back interest, for the whole time of the loan. It's not worth it. IMHO unless it's an emergency and you're emergency fund is drained, it's not worth going into debt.

__________________

Well, I just wanna point out that in my case its been worth it. I haven't had a bad experience of dishonesty with these companies in the past - and my credit rating went up majorly after these purchases. I think as long as you stay disciplined and can afford it, its not a bad thing.

__________________
You must be the change you want to see in the world ~ Gandhi