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Not Understanding What “Afford” Means
My husband and I took out a number of small loans and car payments without really considering if we could afford them. To us, we could “afford” them if the payment was small enough for us to handle every month. Taking on debt this way landed us in financial trouble.
When we first got married, we thought we had to have all the extras. Premium cable, every phone feature available, an apartment with three bedrooms, and a brand new car were some of our “needs.” We accumulated payments one by one, so it didn’t seem like we were doing anything we couldn’t handle. Besides, we “needed” everything.
Money was a little tight at first. We could manage it. The payments were all reasonable and we could “afford” them. Then money was a little scarcer. We could still manage it. We had credit cards we could use, and we knew we could “afford” those payments because we were already paying those every month. Increasing our credit card balances would only add a little to each month’s payment. This pattern continued until our finances were so out of control we had no idea what to do.
We learned that the only time you can truly afford something is if you can pay for it with cash. Advertisements entice you to try a product or service with the claim that there will be a low monthly payment. This might sound like a good deal, but how long will you be making those low monthly payments? How will this low monthly payment fit in with all the other low monthly payments you have? What happens if you or your spouse loses a job? Will the payments still seem low?
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If you’re looking only at how much you can “afford” to pay every month, take a step back and really think about what you’re doing. You’re probably getting yourself into something that will be difficult to get out of. If a low monthly payment is the main draw for a product or service, think about how this might be the only way for advertisers to get your attention. In other words, you don’t really need what they’re selling.
My suggestion for you:
Be careful about taking on too many monthly obligations, even if you can “afford” the monthly payments. Think about how long you’ll be making these payments, how much the total cost will be, and whether you even need to make the purchase.
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