Pay later at your own peril; empower yourself by practising delayed gratification

Photo by Alice Pasqual

Buy now, pay later is a great idea until it's not.
With the rising cost of living resulting in skipped payments and late fees, the reality of all too easy borrowing facilities is coming home to roost. 
Since After Pay and the like came to New Zealand around five years ago, the Buy Now, Pay Later approach to buying has become very popular. Especially with younger folks and students who may not be so cashed-up. It's easy to understand why? (Listen to my most recent podcast on Smart Money with NewstalkZB here). 
It ropes in a whole new slew of buyers that will add to their bottom line for retailers. 
It gives shoppers easy access to debt that they may not otherwise get because, unlike credit cards, there are no credit checks done to get it.
It also serves up an easy consumeristic high. They call it retail therapy for a reason.
Typically, you pay 25% of the cost upfront, with the remainder being split over six-eight weeks, which is interest-free.
Too easy, right? Yes, until you forget or can't make one of the regular payments, you are fined. 
With After Pay, the fine is $10 for anything under $40. And for over $40, the maximum fee is 25% of the original cost, up to a maximum of $68, whichever is less. (Read this excellent review of AfterPay here on MoneyHub.)
With a maximum purchase limit of $2,000, it may seem harmless enough, and yet even at that threshold, people are now running into repayment problems. (Read more in this Stuff article by Rob Stock here).
With petrol rising above $3 a litre and cheese costing $20 a block, it's no wonder. Suddenly, the cost of living in New Zealand has soared. Inflation, nearing 8%, is running hotter than in 50 years!
Those cheap shopping sprees are now riskier than ever from a repayment perspective.
The harsh truth is that it has become too easy to borrow money. 
As tempting as it is to blame the lenders for making it too easy, there should be some personal accountability too.
So many people are in the poo financially because they don't keep close enough track of their spending, and they fail to understand the critical T&Cs of borrowing money and the actual long-term cost. 
But the root problem I maintain is that most folks don't know how to control their impulse, which leads to buying stuff in the first place that they couldn't actually afford.
Don't get me wrong. I get that it is convenient if you need a new pair of shoes for an important job interview and don't have the cash up front to buy them. First impressions are everything, so you wouldn't want to show up looking less than your best. I get that. But the sad reality is that most purchases people make are totally frivolous and unnecessary. If you can afford them, great, I guess. Still, if you can't, it will cost way more than the purchase price because you were late with the payments or failed to pay off your credit card balance in full each month. This is where one bad habit builds after another and starts to make your life financially difficult.
So...

• Before buying, ask yourself whether you really need that shiny new thing that's caught your eye.
• Consider waiting at least 24 hours to see whether you still have a hankering for that thing the next day.
• Look at your bank balance and determine whether that extra payment is realistic, even if it is deferred.
• Stop to reflect on whether what that helpful for more than a fleeting moment or occasion.
• Ask yourself what the opportunity cost is? i.e. if you don't buy this thing, where else may that money be better spent? i.e. maybe you still have a lot of outstanding credit card debt carrying high interest that you should be retiring instead of acquiring more debt.

Over time, when you put these practices into play, you begin to shift your mindset and behaviour around money.  
Mind over money. Simple.