Reliance on Tomorrow Requires Debt Today

by Kevin on August 18, 2011

You’ve found that thing that you really want, but you haven’t planned for it. It’s so shiny, so new… and sitting right in front of you. Your hand reaches for your wallet.

Stop. Have you really thought this through?

No matter how large or small the purchase you should put some thought into it. At the very least ask yourself where the money is going to come from. If the answer is, “from my savings for this item” then feel free to buy it. You’ve planned for it. Otherwise, step away. Put the wallet back in your pocket, and walk away. You’ve just stared down the road to debt, payments, and interest.

We live in a world where if we want it, we get it. Immediate gratification is standard operating procedure. Setting a financial goal, even to buy something, and spending time saving up for it seems like a lost art. Yet so many decide to forego waiting. We want it now, so we swipe the credit card.

Let Future You Pay For It

I have long recommended to avoid relying on tomorrow to pay for today. Why? If you can’t afford to buy it right now, you simply shouldn’t buy it unless it is an emergency. If you purchase something today that you don’t have the cash for, you are buying the lie that you will have income available to you in the future to pay off the purchase.

That’s a big mistake and a slippery slope. Suddenly everything you want looks like it only costs a few dollars per month. Why wait a few months to save up when you could have it now and pay it off in the future?

Your Future Income Isn’t Guaranteed

The first problem is your future income isn’t guaranteed. Ask anyone who has been laid off in the last 2 years what it feels like to have financial obligations they can’t meet. Just because you have a good income and a good job, or your spouse does, doesn’t mean that income will be around forever.

Life of Payments

Even if your income remained consistent as long as you needed it to, you find yourself with a life of nothing but payments. First it’s only $300 for the car payment. Then it’s only an extra $50 per month on the credit card for the cruise. And that bedroom furniture is only $200 per month for 2 years. Before you know it all of your income is spent before you have time to spend it, and it is paying for stuff you’ve been using for a while. Not to mention you can’t save any money to prepare for future goals or emergencies.

Can’t Afford Means Adding Debt

Relying on tomorrow’s income inevitably means you are taking on debt today. Almost every time you have the option to not buy something so you can save up to pay cash and you decide to finance it, you’ve made a financial mistake. You’re paying interest into someone else’s pocket so that you can have what you want today.

The better way:

  • Spend less than you earn.
  • Pay off your balances to eliminate payments and free up extra cash for stuff you want.
  • If you want something, save up for it first.
  • Always save for the future.


Emily August 26, 2011 at 7:59 pm

What you say about not knowing your future income is crucial when applying for a mortgage. A lot of people buy a home based on their nice salary or duel income now, not thinking that could change in a few years.

Kevin August 30, 2011 at 8:50 pm

Exactly. You have to be able to look into the future at how things might chance, and be financially prepared for those changes.

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