The trap of “low” monthly payments

The other day I received an ad in the mail from my local rent-to-own company, attempting to get me to come visit their store and leave with some great merchandise. I have always known that these stores were a rip off and I never understood why people would go to the stores until I looked at the ad.

Not my local rent to own, but someplace similar

The main attraction on the ad was a 60 inch TV that you could rent for $100 a month. That doesn’t sound like such a bad deal, until you look around at other stores and see that you can buy that same TV for about $1,400. Or you can rent-to-own for $100 for 24 months and it’s all yours … at about 70% more than what you can buy it straight up for!

Another example in the ad was a laptop computer. It can be yours for only $99 a month for 12 months. Or you can just save the $99 for four months and buy it yourself for $399 at your local electronics store.

This is a perfect example of why you need to ask yourself how much instead of how much a month when looking at making a payment. If you look at the total cost of the TV you will realize that you could just wait, save up the money and buy it outright in 14 months. Whereas if you did the easier thing and just looked at the $100 “low” monthly payment you could rationalize and talk yourself into doing it. But once you get control of your money and look at your finances in the long run, you won’t be enticed by these ads and instead you can just simply put them into the recycling bin.

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About Jon White

Giving people hope and seeing them win with their finances is something I have a strong passion for. Because of this passion I started JW’s Financial Coaching in the summer of 2010. Financial coaching has allowed me to combine my passions of finances, teaching, and helping others by helping people get on the right track financially. I'm interested in hearing your story so please do not hesitate to interact with me through social media.
This entry was posted in Debt, Financial Discipline, Money Saving Tips, Personal Story, Spending and tagged . Bookmark the permalink.

6 Responses to The trap of “low” monthly payments

  1. Keith Bunn says:

    I agree 100% Jon! I once posted on Facebook that those places were a rip off. I used a washer & dryer in my example, & just like you, I explained the cost of renting vs buying. After I posted my thoughts, a guy responded & told me that I wasn’t comparing apples to apples & that renting the washer & dryer sounded like a good deal. I told him that he was right, I wasn’t comparing apples to apples. It was more like apples to oranges & that the amount of money he would have spent on his “good deal” would have bought him the washer & dryer 2X over.
    I just don’t get it at times. I think we have a long,& prosperous career ahead of us Jon.

    • Jon White says:

      Thanks for sharing that story Keith. Unfortunately not everyone sees it as we do. That’s why there will always be plenty of work for us financial coaches. 🙂

  2. rxcard says:

    Reblogged this on Debt Elimation & Money Savings and commented:
    Blogger makes an excellent point, take a look..

  3. Absolutely true! Taking a little extra time to consider the situation saves LOTS – in this situation $1000. That’s enough to put away a Baby Emergency Fund 🙂

    • Jon White says:

      Great point! By actually being patient, instead of being impulsive, you are not only saving money, but building the discipline necessary to win with money.

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