12/08/2016
A Timely Message From the Bankruptcy Law Network, LLC
Resistance is Futile… Or so the Creditors Think.
The holiday season has rolled around once again and regardless of whether you are in bankruptcy, this season tends to be a season of stress instead of joy. Americans continue to focus on purchases geared towards their wants instead of their needs. This pattern of spending is exactly what creditors prey on to increase their profits. They spend money designing advertising to convince you through guilt that you really can afford to spend thousands of dollars for unnecessary Christmas gifts. The creditors do not care you are struggling to keep a roof over your head, pay your student loans, and put food on the table all while continuing to pay for your health insurance. The sole goal of the creditor this holiday season is to increase their money by taking yours.
You’ve seen the commercials where one hangs out with their buddy called budget. It is a clever commercial but what the creditor does not blatantly disclose is their interest rate of 25.15% and a late payment fee of $38 per month. So if you purchase an Ipad at the advertised price of $779.99 you may think you are getting a good deal, but let’s delve a little deeper into that purchase.
You will see in the disclosures the minimum required payment is $46.99 per month but they will require $49.99 per month on this purchase. Straight math shows the Ipad will be paid in approximately 16 months IF you are not paying interest and make a monthly payment of $49.99 per month.
So how long will it take to purchase the Ipad at an interest rate of 25.15%? If you make every payment on time, the Ipad should be paid in approximately 20 months. You may think for a moment that another 4 months of payments isn’t bad but the story does not end there. You are now paying approximately $173 to the creditor for the ability to purchase this Ipad over time. It is a great business model for the creditor but a poor budget decision for you.
The consequence of an “over time”purchase is a high interest rate on an item that will be out of date long before you finish paying for the item. Additionally, if you are purchasing this Ipad for your child or even yourself, you must ask, will the item still be used 30 days after Christmas? “I don’t know” means you should strongly reconsider purchasing items through ANY TYPE of credit plan or if at all.
It may sound nerdy but it is true, the greatest gift you can give this holiday season is your time. Your child will try to convince you they cannot live without a new phone, a tablet, or a Hatchimal. The reality? Those gifts will be forgotten in about in six weeks, six days, or even six hours and they will not leave a lasting impression.
What will make a lasting impression? All the games, parent-teacher conferences, and parent-child dances you missed because you had to work overtime to pay for the “must have” gifts. Only time will tell whether that lasting impression will positive or negative.
Resist the wily ways of the creditor and do not give into their attempts to guilt you into debt this holiday season.
The more you know regarding how the credit industry works and the true cost of credit, the more POWER you will have to show the creditor that resistance to impulse buying and high interest rates is NOT futile!
