I work in the retail space. I have witnessed a rise in consumers paying for purchases under $200 using various short term credit companies. Some examples like Affirm, Klarna and Afterpay are used to purchase these non-essential items. This is a very concerning trend because it assumes that you know what the future holds for you. Tomorrow will bring its own challenges. A flat tire, medical emergency or sickness could make paying those loans back impossible.
You Are On Your Own
When you are no longer able to pay back those loans you are now at the mercy of credit companies. They set the terms and payment amount. Credit companies are charging extremely high late fees up to 36%. That is higher than most traditional credit card company’s rates. A jacket that cost $150 now cost $204. And the late fees can increase the cost if you miss more payments. As of 2023, the short-term credit lenders are unregulated. They don’t have to adhere to the Truth in Lending Act like credit card companies. If you encounter any issues with your loan, you are on your own.
You Are The Product
Why would a company offer you no interest or late fees when making a purchase? Retailers know that you will spend more money if you do not have to pay in full at checkout. They are willing to pay short-term credit companies a fee for you to spend more money. The target market for these services? According to Data Horizon Research, the target market are individuals between 18 and 24. Data suggest that the younger generation are opting for short term loans rather than taking on credit card debt. And if life happens to you? The fees and late charges can double your payments. These companies make their living off those who are unable to pay.
You Just Need Bread
Before you purchase anything on credit (or debit) ask yourself, is this a need or a want? For example, I love Whole Foods Rosemary Olive Oil Bread. If I could afford it, I would buy it every time I am out of bread. In reality, I just need bread. And if I can’t afford Whole Foods bread at $7, I need to buy the local store brand bread for $3. In the same way, you need a jacket for winter. It doesn’t have to be a luxury brand. That’s a want. You need a jacket to keep you warm. That’s the need.
Live In Today
Current culture promotes putting problems off until later. Climate change, economic uncertainty are great examples of this. The key problem with this thinking is, that we don’t know what the future holds. Using future dollars to pay off present purchases doesn’t benefit your future self. Your future self will need those dollars for their own timeline. They may want to go on vacation, to a show or to a nice dinner. Because your future self is paying for a bike your past self financed months ago, your present suffers. If you can’t afford the purchase, find a cheaper alternative. Live within your means.
Your Money Should Work For You
When you are in debt, whether it be short or long term; you are working for the benefit of the credit companies. Your money should always be working for your benefit. It should be multiplying and making more through investments. If you have debt, you should be working to pay down any existing obligations. Lastly, your money should be securing a stable future you and those you love.
Be Counter Cultural
It’s not easy to go against the current culture that promotes debt. I know, I am working to pay down my debt as I write this. Always challenge the idea that debt of any kind is okay. Challenge your own mindset of a want vs. a need is. Before making a purchase, ask yourself, do I really need this? Can I find a cheaper alternative? How much can I save each paycheck to purchase it? These questions will help you identify your motives behind the purchase. It takes discipline and a strong will to say no to debt and live within your means. It is possible and you can do it.
The principles of money 
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