Offers for financing furniture are everywhere these days. You’ll see commercials on TV, offers in stores, signs on streets, and more.
I see them all the time, and I can't believe the “deals” they are promising people.
To be honest, I have never once seen a good deal on furniture financing.
I've seen offers for bed frames at $100 a week for a year, computers at $50 a week for a year, and so on. The low monthly payment is what pulls people in, but when you think about how long you will be making that payment, financing furniture and electronics becomes pretty unrealistic.
Side note: Of course, there are always exceptions when it comes to financing and credit. If you know how to take advantage of certain financing offers, then you may be able to come out ahead. However, if you know that you are not good at handling debt (which is probably the majority of the population), then it may be best to avoid offers like this completely.
When we were looking at furniture a few years ago (before we moved into an RV), the salesman kept telling us that we could just finance everything and wouldn’t have to feel the pain of spending so much money all at once.
The finance blogger in me probably should have slapped him because that is such a horrible suggestion.
Furniture can be quite expensive, and it can be very easy to walk out of a furniture store with a huge bill. However, no matter how enticing those financing offers may be, please remember that you will eventually have to pay the FULL cost.
Too many people get caught up when they think about the monthly payments, but it’s the full cost that is important.
Here is why you should stop financing furniture.
You'll pay more for furniture if you finance it.
There's a reason why companies push financing furniture. They know that the average person will spend more money on furniture if they can have it financed.
Furniture stores know that the average person will be more inclined to buy furniture if it's $100 per month, instead of $2,000 upfront. However, that's a bad way to think about spending money, as it just leads to debt!
Financing furniture can also lead to spending much more than you originally planned for. By signing up for financing or paying for a purchase with a credit card, it may make the item seem more “affordable.” But, not having the money to pay for it up front is the opposite of affordable.
Even if you can afford that monthly payment, it doesn’t mean financing furniture is the best idea. Financing furniture can lead to stress, a paycheck to paycheck lifestyle, delayed retirement, and more. No one wants to experience these things.
If you can't afford the furniture in cash, then you definitely should not be financing it.
It's just furniture. And, it will lose the majority of it's value the moment you put it into your home.
Furniture can be very overpriced.
Furniture stores that provide financing or rent-to-own options usually have overpriced furniture.
Because of the deals they offer, like the ones mentioned at the beginning of this article, the price is often inflated to three or four times more than the actual price if you would have paid for it with cash.
The low payment is what gets people, but when you think about how long you will have that payment for, it almost always means you’ll be spending a crazy amount more.
I mean, why would someone pay $3,000 for a $500 computer?
It just doesn't make any sense!
Please think about the full cost of those monthly payments, and compare that total with what it would cost to buy that item upfront. That alone will probably make you want to run away from any financing furniture “deals” that you come across.
If debt is the only way, then you can't afford it.
The average person has a lot of debt– in fact, the average U.S. household has over $10,000 in credit card debt alone. There are loans for everything, and sadly, many only look at the monthly payment to determine whether or not they can make their purchase.
Some look to debt as a way of affording things for the rest of their lives. Instead of being more realistic with their finances, many people even “budget” debt well into their future.
Debt should not be normal. Just think about what life would be like if everyone was living debt free? What if we only purchased things we could afford? And, if we did need to take on debt, what if we were more selective and careful when doing so?
You shouldn't have the mindset that debt is a normal part of life. Normalizing debt can lead to thinking it’s okay to use debt to pay for everything instead of focusing on living debt free.
You should make sure that you can actually afford the purchases you are making and not by just looking at the monthly payment. You should make sure you are fully analyzing your purchases, differentiating between wants and needs, and budgeting more realistically.
If the only way you can afford furniture is to finance it, then you can't afford it.
It's really that simple.
Related: How To Make Extra Money in 2017
Financing furniture may prevent you from reaching other goals.
A monthly furniture payment can add a lot of financial stress to your life. The amount of happiness you get from purchasing furniture can never match the amount of hardship brought on by debt.
I've never heard a person say “I'm so glad I have furniture debt because this furniture is so nice.”
Usually, it's the exact opposite.
Financing furniture can cause a person to:
- Have lots of regret
- Not reach retirement
- Stress about keeping up with others
- Stress over paying bills
And so on!
Living debt free means that you are in control of the life you want. On the other hand, a furniture payment can’t bring that kind of control or happiness.
You may miss a payment and pay hefty costs.
While you might think that you'll never miss a payment, it could happen. Even if you think that you'll always have the money to make your payment, it is always possible that you miss it for one reason or another, such as just forgetting to schedule it.
Missing one payment isn't hard to do. Many furniture companies require payments once a week, so you will be looking at something like 52 payments for a standard furniture loan. That's a lot of payments to remember to make!
While you may think that missing a payment isn’t a big deal, many furniture financing deals have consequences if you miss just one payment.
You may have to pay a large penalty, interest charges, and more.
If you are thinking about financing, you will definitely want to read the terms and conditions of the loan. Many times their terms require you to pay interest charges for the WHOLE loan (starting from day 1), for just missing one payment. So, even if you are on a 0% financing plan, you may be required to pay the real interest rate (which may be 20% or more!) for the whole life of the loan, even if you are on one of the very last payments.
That 0% interest rate may not look so good now.
This is something that many people aren't aware of, and it can completely destroy your finances!
You don't need unaffordable furniture.
Some items are needs, but many of the things we buy are just wants. If you don’t realize the difference between your wants and needs, you may feel like you have to take on debt to fund your lifestyle.
To me, financing furniture is a want. It definitely isn’t something anyone needs.
Remember, the only things you actually need include a place to live, a certain amount of clothing, food, and water.
There are plenty of other ways to furnish your home, and you don't need debt in order to do so!
To furnish your home, you could:
- Use cash. Of course, I have to say this one first. You should use cash for furniture so that you know you can actually afford the purchase.
- Be smart with credit. If you use a credit card in order to get rewards points, make sure you pay it off ASAP!
- Look on Craigslist. There are probably several ads in your local area from people who are selling or even giving away perfectly fine furniture. You can get a really good deal this way!
- See what your friends and family are giving away. Many people have extra furniture that they'd love to give away! This is actually how I furnished my first rental – we didn't buy a thing!
Do you have a home furniture payment? What do you think of financing furniture?
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.