What American Spending is Built On

Let’s talk about financing. As with most economic concepts, it is not sexy, but I’ll be damned if it isn’t the biggest economic principle our society works on.

Financing is what lets you have a credit card and allows you to buy an item when you don’t have the money to cover the full cost of it. Financing is most often associated with big-ticket items like cars or appliances, but credit cards are also a form of financing, albeit a slightly less elegant and more economically challenging version.

Boyfriend and I recently purchased a big-ticket item in the form of a new mattress. We had assessed our current budget, upcoming cash flow, credit card balances and knew we could buy one outright if it was $1000 or less. We walked in the Sleep Country with every intention of purchasing a mattress for that price.

And then we saw the Tempurpedics.

Ok, for those of you who don’t know, a Tempurpedic mattress is—how can I put this?—the best mattress on the PLANET! We slept on one when we were in Portland and had the best nights of sleep.

So we flirted with the idea of getting a mattress like it, but not the Tempurpedic exactly. But the salesguy insisted that we lie down on a mattress worth more than 2 months rent, and we relented because we are spineless. Or at least it feels that way since we’ve been sleeping on a mattress that is too soft.

Oh. My. God. It was heaven. In foam form.

And we were suckered in and found ourselves talking about the $1900 model or the $2300 model. And who could put it on a credit card and if we had enough in our checking accounts to pay it off quickly. And then the salesguy says:

“We have 36 month interest free financing for the Tempurpedics. Or you can get 12 months interest free financing and $200 worth of additional Tempurpedic merchandise.”

So here’s what that means in slightly simpler terms: If you bought a Tempurpedic it would be just like if you put it on a credit card, except that you wouldn’t have any interest on it for the time limit you selected. We elected the 12 months since we wanted Tempurpedic pillows for free (who knew a pillow could cost $100? Not me.).

There is a catch with financing, though. Read through the contract carefully. If we missed a payment we would be charged a $35 missed payment fee. And if we didn’t pay it off in full at the end of the 12 months we would be charged 29.95% interest until we did and we would be charged the interest for the last year, even though we had made payments on it.

So financing is great, but read the fine print. We now have our great mattress and an additional payment every month for it, but our backs have realigned and we’ve grown spines again.

Have you recently purchased something with financing?

If you’re considering purchasing something large and want help understanding the financing, e-mail me at artisticfinancialpl