Installments good or bad?
Installments good or bad? This is the question that I am most frequently asked by most of my clients.
Installments good or bad is also seen as an attractive option when you have trouble closing the month, but is installment payment a good solution?
As you know, I am fascinated by the psychological aspect of spending money. Let us outline what it means to installments purchase and why we are offered such an option. Installment as an incentive to convince you to buy.
If we need to purchase an item that costs 10 million VND, but we are offered 10 installments of 1 million VND, it is the amount of 1 million VND that we remember and not the 10 million VND. Not only that, you might be tempted to buy a more expensive item if it is on installments. Also if you do not work with a budget you will forget by the 3rd month that you have this payment.
So what are the rules for paying in installments?
- For items that we purchase on a weekly and monthly basis, such as food, clothing, arnona, electricity and telephone bills. Do not pay on installments, because the next month we have to pay them again.
- If you have a major asset purchase, e.g. a refrigerator or computer, it is recommended to plan for them, so that you can take advantage of sales. They normally occur before and during Pesach and Succot. However, the best sale is just before the end of the year, like now, where shop keepers want to get rid of their stock. TIP: if you pay in cash you can usually receive an additional discount.
- However, if you have to pay in installments, especially if you buy on credit, make sure that the installments are as few as possible. TIP: credit is when you want to pay in more than the usual 3 installments – CHECK THE INTEREST RATE you are offered on credit purchases. Sometimes it might be worthwhile to take out a loan.
- Remember the key to financial stability is to track and plan. Remember if you have installments to put them in your budget for the coming months so that your cashflow reflects this extra expense, And, you are not tempted to buy again on instalments.
To determine whether installments good or bad, it must be based on your experience, judgment to be able to handle payments wisely and will ensure that you achieve financial stability at any time. any.