I'm no Warren Buffet. (See the photo. That's Warren Buffett. From his own Wikipedia page.) I have a tax guy and a retirement guy because I don't know enough about taxes and retirement portfolios to do them myself. (Or do I? Hmmm...) But at my age (Don't ask; I'm not telling), I do know a thing or two about saving money and not overspending, which is the same thing. And I know enough to know that people, businesses and organizations will lie to make themselves a buck. As House used to say, "Everybody lies." And as I say...Well, see the previous blog about lies by clicking here.
So here's how a local (and national, I think) furniture store lied in a mailing recently:
It sent me a red, white and blue (July 4th week, right? Plus I'll bet it works subliminally) offer that said I could get any mattress or piece of furniture I wanted, and I wouldn't have to pay any interest for over 6 years. That 6 year thing was shown twice, in giant multi-colored print, twice on the same one page of this thing.
So there's a lot wrong here.
First, I noticed right away that there was not one single photo of a mattress of piece of furniture. (See the photo below? Furniture, right? Not one single photo of something like that in this ad. The photo is from jordans.com/living-room, by the way.) So what's being sold here? Furniture and mattresses? Nope. The furniture store is selling its payment options. And the option here is to get whatever you want, interest-free, for 6 years. So that struck me as odd, that a furniture store was focusing on its payment and interest options. Why would it do that? Well, I'll bet that they make more money on the interest payments than they do on their own furniture. That's why car companies sell cars the same way in TV ads. You see the car on the road, but the guys babble about the interest payments, or the no-interest, or the leasing options. They make more money off the money than they do off the car. Same here with furniture. Good for them, bad for you. Why? Because if someone's making money off your money, you're paying too much money. If you weren't, there wouldn't be any surplus money for them to make money off of. You'd pay just the price for the furniture, for example, so the store, the supplier and the employees get paid, but that's it. They have to move on. If someone's making money off your money, which is what interest is, then you're paying too much money. You don't want to do that.
Secondly, and maybe more important, YOU NEVER WANT TO PAY INTEREST ON ANYTHING, EVER, FOR ANY REASON. That's so important that I put it in impolite and angry caps. But the word "interest" is a swear word, right up there with mother----er and the C-word. In fact, it's even worse, because like an STD, once you've got it, you're never going to be able to make it go away. Right? Do you owe interest payments on a credit card? How about your student loans? Look at your mortgage. How much are you paying in interest? Interest in mortgages are unavoidable if you want a house (I've got 2 mortgages, so I know), but in everything else it is very easily avoidable. (If I can't afford to pay the monthly credit card bill, I don't buy it. And come hell or high water, I WILL pay off that credit card bill in full, and I will not make monthly payments on it, ever, for any reason. I don't have a cent of credit card debt, and I had no life for a few years after I got my degree so that I could pay off my student loans all at once, so I don't own a cent of student loans, either. But I truthfully was lifeless for a few years as I saved to pay off that bad boy.) If it's not an emergency--and I'm talking someone is dying here, or your house is about to cave in--and if you don't have the money, you don't buy it. Period. This furniture ad in the mail was banking on the fact (See what I did there?) that people are so used to interest payments, that the real kicker of the ad was the interest-free option and not the furniture. That's crazy. Because, once again, if you're paying interest, you're paying too much for something. There's no second course. If you're trying to lose weight, there's no dessert after dinner. And if you're trying to stay out of debt, there's no interest after the one initial payment.
You might think that you've got 6 years to pay that thing off, so you won't have to pay any interest at all. Fine--if that's true. But is it? What do you have to do to get the 6 years of no interest? What do you have to sign for? I'll bet you'll have to get that furniture company's credit card, and you'll have to get an account with them, or with whomever runs their financial backing. So someone's already making money off of you, and they're betting that you won't pay it off in 6 years. I repeat, someone's making money off of you, and someone's betting against you. That's inherently negative and should scare you away.
Well, let's read the fine print. After every "6 Years" there's an *. An asterisk means there's a catch, a stipulation, and it means someone's trying to screw you. If they weren't, the information would be in as giant, multi-colored print as the "6 Years." There's another * after "No minimum purchase" and a tiny crucifix (Why hasn't someone harped on that blasphemy, using a tiny crucifix symbol to screw people out of their own money?) after "No money down." They're also betting you won't read the fine print. No one ever reads the fine print. You should always read the fine print. So let's read the fine print. And I'm looking for the answer to the question: How much would the interest be?
Whoa! If you don't pay the amount in time, you'll be hit with 29.99% interest! Holy crap! That means you'll owe in interest $30 for every $100 you haven't paid. That's crazy! That's $300 for every $1000. That's insane. Is that worth the risk? Hell no! If you don't have any credit card debt, your own credit card has a lower APR than that. And, furthermore, you're already thinking badly because if you can't afford to pay it on your very next month's credit card bill, you shouldn't buy it at all. You can't afford to think that you have 6 years to pay that off. I can't. I can only afford to think that I've got 1 MONTH to pay it off, and if I can't do that, I don't buy it. Period. And, yes, my furniture's older, but it's comfortable enough. And, yes, I do deserve better--but that doesn't mean that I'm going to get it, or that I'm entitled to it. I have to earn it, and if I don't have the money for it in 30 days, I haven't earned it. Don't start down that interest-free road, because you don't know where that road ends. And "interest-free" doesn't mean "free." And if you're playing games with interest, you'll lose.
Photo: An asterisk in an early Greek papyrus. It's possible people were getting screwed with it then, about 2,000 years ago. From the Wikipedia page for the word "asterisk."
And it says here: "For $X a month you could redecorate every room in your entire home." No. No you can't. It takes a few grand to do that, and if you're like me, you won't be able to pay back a few grand in 6 years. If you can, then wait those 6 years and save and pay cash for everything so nobody makes a dime off your money and you're not in debt. Redecorating my home with brand new furniture would cost over $10,000. There's no way in hell I'd be able to pay that off in 10 years, never mind 6. And that'll be $3,000 extra in interest. So instead of $10,000, I'd owe $13,000.
And it doesn't say here that you can pay more than your equal monthly payment. Because you want to pay that off before the 6 years, right? To do that, you have to pay more than the equal monthly payment, every single month. If you're not allowed to do that--if you have to pay just the equal monthly payment so that you're stuck with this contract for exactly 6 years, then you're screwed. Because crap happens, and you're going to fall behind on a payment, maybe even the very last one, 6 years later, and your now in debt, or at the very least your credit takes a big hit.
No thanks. I'm throwing it away. Actually, I'm throwing it in the firepit, so I don't have to buy kindling. I'll save money off of the money this furniture company paid to mail this to me. So help me, I'll make money off of them.
And so that's how they lie. Misdirection, in this case. This furniture company is selling money with this ad, not furniture. Always ask yourself, "What would they gain doing that?" If someone were to call them up and ask them if they made more money off its payment plans or its furniture, I'll bet they'll say the payment plans. And that's how they lie. Not as bad as the flat-out lies meant to actually fool me like the last blog. This isn't for a power trip or for political gain. And everyone's got to make a buck, so this doesn't make me angry like the last one, but still...Ain't nothing for free in this world, right? Not even 6 years of interest-free payments. If it sounds too good to be true, it is. Especially if there's money involved. (Some things, and some people, are actually as good as they sound. But not if there's money involved.)
Next time on "They Lie": A mortgage company insisting they're holding a really low interest payment percentage for me that's actually higher than the one I already have.
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