Do You Suffer From Payment Syndrome?

There is near my house, a store that I hate to see people enter. The people that frequent these stores suffer from what I like to call, “payment syndrome”. They only care about the payment of whatever it is they want to buy.

And these stores cater to the payment syndrome sufferers. No, the store is not some shady establishment or morally defunct industry . . . Well . . . maybe?

It’s a place where you can rent just about any household item. You know what I’m talking about. They go by different names, but the concept is always the same. You can furnish your entire house with rented furniture and appliances from these places.

And the worst part? They advertise based on weekly payments for said rented items.

Renting furniture by the week.

Have you ever wondered what the payment terms are, or the total price of furniture in places like this? Or have you ever rented items from places like this?

I wondered about the prices, so I did a little research. And because I’m not extremely motivated right now I didn’t want to waste too much of my time, I went to the RAC (Rent-a-center) website, and looked at the first thing that caught my eye. It was a nice couch and loveseat combo. I mean, everyone should have somewhere to sit . . . right?couch on payments?

For only $24.99 per week you can sit your behind (and your guests’) down on that comfortable sitting apparatus. It didn’t sound too bad. As an astute personal financial savant, you’re probably wondering, “But for how many weeks do you have to pay only $24.99 per week?”

I thought the same thing, and as it turns out, for this particular couch set, a mere 78 weeks. Which amounts to a total of only $1949.22!!

At first I thought, “hmmm, a nice couch set could cost two thousand dollars. Some even cost more. Maybe that’s a reasonable offer.”

Then I saw the 6 months same as cash offer: $1199.99. “Wow, even better. It’s like a sale!!”

Then I had another thought. What if I just buy that same couch and loveseat from another store that actually sells furniture?

Compare to other Retailers

So I did a quick search. And I found that same couch and loveseat combo for a total of $662!!

So, tell me again: Why would anyone in their right mind do business with these con-men?

If you take your $25 dollars a week and put it in a shoebox, in just 27 weeks (6 months) you would have enough money to buy the furniture outright from a reputable store!

Even the 6 months same as cash offer is a ripoff!

Yet, these stores are still in business, and people still buy rent things from them! Why???

Note: There are a few situations where renting furniture or a TV might make sense. For instance: a special event like a party, vacation, or short term lease where you don’t want to move all your belongings. 

The mindset that causes “Payment syndrome”

I would like to think that all who darken the doors of rent-anything-stores suffer from payment syndrome. Either caused by lack of knowledge or just immaturity. After-all, how could they knowingly commit such financial suicide?

You may still be wondering, what is “payment syndrome”?You have Payment Syndrome

My definition is: It’s a mindset that causes people of all income levels to think: if the payment is low enough, I can afford it. It doesn’t matter the terms or interest rate. Terms?!? What are terms?

I myself have been guilty of succumbing to payment syndrome a time or two. I start thinking (while watching TV), I can buy that Lexus! It’s only $449 per month for qualified buyers. I can afford a Lexu . . .  And then I usually snap out of it with a quick punch to the face – Mr. Money Mustache style.(link contains language) **shakes head** What was I thinking?

There is a mindset shift that needs to happen here. The mindset of, “what’s the payment?” or payment syndrome is costing you a fortune. Others are getting rich because of our inability to delay gratification.

That’s really all it is. Self-control. The ability to delay pleasure or gratification.

We don’t want to wait six months to save the money, when we can fork over small bits of our lives every week or month.

This is the mindset that results in debt and financial ruin. When it’s easier to swipe the plastic, and even easier to set up an automatic payment plan.

If you find yourself thinking, “I can afford that payment?” when it comes to buying anything: furniture, cars, or even computers, rest assured: You have payment syndrome!

How do You Cure Payment Syndrome?

I’m glad you asked. 😉

The first thing you should be able to do is realize an impulse buy when you see it. We’ve already discussed impulse buys. But if you are tempted to finance an impulse buy, Get outta there – and fast!!

The next thing you should do, is think about the total cost of the item you want to buy and then ask yourself two questions. For the couch example above, let’s use $700 as the total price. You could compare the total price to the financed price in this situation, but it’s three times as much.  **shakes head again**  It’s just ridiculous to rent furniture.

Note: If you have trouble finding the total price, you can shop elsewhere. You don’t need to do business with scheisters like that.

Question One: do you have $700 right now to pay for this couch set?

If you answered “No” to this question, then you should stop right here. You can’t afford the couch right now! If you’ll have the money in a month, come back then and buy it. Don’t buy it now just because you’ll “have the money in a month”.

This accomplishes two things. By delaying the purchase, it helps you determine if you really want that item. And it also lets you shop around to see if you might find a better deal elsewhere. But if you answer, “Yes”, then you can continue.

Question Two: do you want to spend $700 right now on this couch set? In other words, is it worth spending that amount of money upfront today?

This questions leads you to evaluate the purchase in terms of the total amount of money that you’ll be required to pay. Weigh the total purchase price today with the financed purchase price. And you can determine whether or not you value the item enough to buy it.

When you only consider the payments, you are disregarding the total amount you end up paying.

Listen closely: Everything that has payments associated with it, is costing you more than if you paid upfront in cash! Including your house!

Let’s quickly consider a mortgage.

If you purchased a house for $300,000 and put 20% down, your mortgage amount would be: $240,000.

At today’s interest rates of 4%, for a thirty year loan, your monthly payment would be: $1146.

If you pay all 360 payments, you’ll end up paying a total of $472,560 for your three-hundred thousand dollar house!!

Take-Aways

Payment syndrome is widespread and devastating. Signing your future away to pay for things today is destroying our future financial situations. Learn to exercise some self control and delay purchases until you can pay in full with cash.

Marketers don’t even disclose the total price anymore. It’s all about the monthly payment. This is deceptive.

Don’t be fooled. At the least, consider the total financed price of whatever it is that you want to buy. And decide if you want to pay on those terms. For most situations it doesn’t make sense at all.

Have you been guilty of “payment syndrome”? Tell me about it the comments below.

Thanks for reading and sharing.

-Chris

Author

Chris is the original Cash Dad. He's a father of 3 and a mechanical engineer by trade.

15 Comments

  1. Guilty about mortgage. We bought our home with 5% down payment, and had to even pay PMI. However, we have been actively paying down our mortgage, and will be done in 5 more years (about 8 years since the beginning).

    • Chris Reply

      That doesn’t sound too bad. We did a similar thing with our first house. And though I wouldn’t do it again, it worked out for us. Thanks for the comment. ?

  2. I have been guilty of the ‘buy it now because I will have the money by the time the bill comes in’ also known as credit card syndrome.
    Still can’t believe how much less that couch costs if you buy somewhere other than a rent-a-center. Crazy that people don’t bother shopping around. Great post.
    Love,
    Kate

  3. Linda Kingsford Reply

    The first two years we owned our house we made double payments with the second payment going to principal. That knocked three plus years off of the end of the mortgage. Payment syndrome has never been our problem because I always want to know the total cost. You state very valid points for those who do fall in that trap. Excellent post, very informative.

    • Chris Reply

      Thanks for the feedback and the comment. I agree, and I’m glad you consider the total cost. I only wish more people did. ?

  4. When I first started reading the article, I thought you were referring to sharing economy that’s popular in cities. Then I figured it must be staging furniture for selling your house. Do people really rent their furniture long term? That seems crazy…

    • Chris Reply

      Yes, people really do. I had a friend who worked for one of these rental places, and he would have to go and take back furniture when they could no longer pay. It’s sad really. They prey on low income families. ?

  5. Something I’ve seen recently are services that allow you to “rent” clothing. Maybe this saves money if you were going to go to an event in a designer outfit? Other clothing rental businesses operate as a subscription service and allow you to try out clothing & only pay for what you keep. But getting a selection of regular clothing that you can wear & return (washing not necessary, even!) seems like it would cost more in the long run, because if you decide to keep anything, the amounts are relatively small and you may not realize how much they end up costing over time. I can’t see the value in this.

    • Chris Reply

      Agreed, these types of services only make sense for a short one time event. Otherwise you’ll pay more, which coincidentally is the only way those companies make any money. ? Thanks for the comment.

  6. I’m the graying saver and I have been guilty of payment syndrome. Whew, feels good to get that off my chest. Fortunately my PS only occurred in the context of mortgages. Still, using my money to make money for someone else. Not good.

    • Chris Reply

      Hahaha. I think we probably all have to some extent. You make a good point though – making your money work for you is certainly a more efficient way of saving. ?

  7. I’ve never been guilty – almost the opposite. I struggle over minor purchases I can easily afford – and sometimes, at the end of the roller coaster of considering a life where I could have bought that $10-20 item, I consider myself to have enjoyed most of its anticipated value and skip the purchase 🙂

    • Chris Reply

      Sounds like you’re more of a saver – which isn’t bad. . . and that you think yourself out of purchases – which isn’t necessarily bad either.
      Thanks for commenting and stopping by. ?

  8. Great post Chris, and congrats on the Rockstar feature! The payment mindset is dangerous. I wrote a post a little while back about how we try to limit as many payments/bills on a monthly basis as possible. This goes really well with your point here in this post about getting rid of the payment syndrome. The less monthly payments we have, the more flexibility and cash flow we have. This buys us more freedom!

    • Chris Reply

      Thanks Matt – totally agree. Leaving yourself options by forgoing payments is what should be striving towards IMO.
      Thanks for commenting. ?

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