‘I am so scared of them now’: Burned from overspending, some ‘buy now, pay later’ users warn others away

After racking up thousands of dollars in debt, some borrowers are deleting the apps from their phones to avoid getting prodded to spend more.

Many consumers find buying now and paying later a godsend when cash is tight. Others are wishing they’d paid upfront to avoid pain later.

Tia Whiteside, 27, knew she was spending more than she would have without buy now, pay later services — the popular loans that let borrowers split purchases into installments with little or no interest. Planning a day trip to the beach with her 2-year-old son last year, she spent $800 on Amazon purchases including a tent, new outfits and a high-end sandcastle kit with the BNPL provider Affirm.

Whiteside, a Greenville, South Carolina-based behavioral analyst who treats childhood autism, makes good money; she and her husband bring in about $110,000 per year combined. But the $6,000 in BNPL loans she’d racked up over roughly two years felt frivolous, she said, especially because they’re planning to buy their first home.

“I was just seeing my paycheck continually eaten up,” said Whiteside, “and I was like, ‘Where’s my money going?’”

herescunty,

A high end sandcastle kit?

guyrocket,
guyrocket avatar

Sounds like a GREAT reason to over borrow.

tal,
@tal@lemmy.today avatar

I guess maybe something like this:

www.amazon.com/…/B08GYLQGKR/

scytale,

The only purchase I’m willing to go into debt for is a house and a car. Anything else I spend on should be something I already have the money for. I don’t understand how some people are willing to take out loans for miscellaneous things that aren’t even necessities.

emax_gomax,

I think it’s a gray line for some folks. I recently got my first credit card and I use it for all day to day expenses. It’s amazing how easy it is to get side tracked while spending. You only having to down pay a certain amount of the outstanding credit and the limits are set by the provider not you. If i didn’t keep monitoring it I think it’d be really easy to get a bill one month that just eats out all my other income.

ThatWeirdGuy1001,
@ThatWeirdGuy1001@lemmy.world avatar

Apparently a lot of people are going into debt for the sake of “keeping up with the Jones’s”

They’re literally putting themselves into tens of thousands of dollars into debt for an iPhone or shit like that. It completely boggles my mind how you could destroy your entire future for extremely short term gains.

Instant gratification has gone too far too fast

joel_feila,
@joel_feila@lemmy.world avatar

Well medical care is not house or car but needed.

scytale,

For sure. I forgot to include that, since it’s a necessity after all.

taranasus,

People have completely lost track of what wealth looks like and it’s not their fault. Using UK numbers cause that’s where I live:

  • salary for a 21yo in 1970 for a white collar job: £1861 - £24k adjusted for inflation. Pretty on par with today’s salary for a starting white collar job.
  • price of the average house in the UK in 1970: £4378. About 3 times the above annual salary. Adjusted for inflation that’s £57,491. The average price of a house in the UK right now is £260,000 after dropping from 300 due to current market. 10 Times the annual salary.

You go to work at least 8 hours a day 5 days a week, in a culture that’s indoctrinating you that you should be thankful you even have these horrible work conditions and pay, you spend half of more of your income on a landlords mortgage payments + extra, and for what? So you can’t even afford to buy a damn games console outright and drown your sorrows in a virtual world?

Yeah no shit their overspending, they just want to live a little of their life when they can but they can’t even afford to do that.

And to everyone that’s about to write “well if they would budget better” kindly fuck into the sun. First of all not everyone should be an accountant in order to live comfortably. A lot of people simply don’t have the skills necessity to do it. But more important, a full time job should be enough to provide for yourself, your family (1 spouse 1 child) and a mortgage on a house or apartment suitable for this family of 3. Not because I feel like people are entitled to this, fast from it, but because this was the norm 55 years ago. This was the normal for my grandparents. Society is supposedly evolving. The first world countries where this was the norm have, supposedly, grown their economies by A LOT. How can it be possible that the majority is worse off than 55 years ago in a more modern society and in now a lot more advanced economies.

But the answer is very simple really isn’t it. You can’t afford a house or a car made in the last decade while the rich are having literally privatised space races. Space races were exclusively the hobbies of nuclear superpowers, funded by taxpayers. How exactly did private individuals summon up the funds to advice this?

Well, you fill in the dots…

SkippingRelax,

ITT a breath of fresh air. I am not alone in having an interest in personal finance, and understanding the basics of it.

Most of my interactions on lemmy so far have been making me feel guilty (and downvoted) for saving some money like I was a dirty billionaire, and to invest in index funds, using capital to further oppress the masses.

FunkPhenomenon,

just stop buying shit you dont need

SkippingRelax,

Indeed, and once she deletes the bnpl app, she’ll use credit cards to buy useless shit like she prolly did before.

I think me and you have been successfully clickbaited though, the journalist looked for such an extreme example to cause outrage, have the article linked on various aggregations, and be discussed.

Blackmist,

The odd loophole these buy now pay later schemes have (or maybe had, I haven’t checked for a while), is that they don’t show up on your credit reports. This means more borrowing, and more opportunity to get in over your head in debt.

And then people get pushed into irresponsible borrowing, like its normal. You see ads for buying a fucking burger and paying it back over six weeks. I’ve seen tile shops that take Klarna as payment. Sorry to be Mr Old Fashioned, but by the stage of life where you’re buying kitchen tiles, you should have your financial shit together.

I mean sure, shit happens and sometimes you need £800 for a car repair or something so you don’t lose your job and fall into a cascade of debt, but $800 on a tent for a two day beach trip for a toddler? Give your head a wobble. He’d have had just as much fun two minutes down the road in a local park.

voracitude,

They don’t put a “hard enquiry” on your report, but it does show up as an open/closed account and will affect your score that way. Not badly necessarily; I bought some stuff with a loan from one of these companies and it actually helped my credit because it increased the number of accounts I have on file (I am one of those who doesn’t open cards etc if I don’t need them, so my credit mix has always been a bit anemic).

echodot,

Planning a day trip to the beach with her 2-year-old son last year, she spent $800 on Amazon purchases including a tent, new outfits and a high-end sandcastle kit

Or you know you could just go to the beach and not buy anything, except maybe some food and drinks. Some people are their own worst enemies. I don’t spend that much on food in a month.

paraphrand,

$55,000 is good money?

Evotech,

Depends on where you live

hark,
@hark@lemmy.world avatar

Well if it isn’t then more than half the country is making bad money: fred.stlouisfed.org/series/MEPAINUSA672N

scoobford,

Our country is big, and has wild variances in both cost and standard of living.

I make a bit less, and $55k would change very little other than the fact that I’d be able to get medical care. I’d still have to live 40 miles from work in an ancient apartment, I’d still be unable to go out to eat or spend money on recreation, and I’d still have to ration my grocery money pretty carefully.

Where my best friend lives, this would be cocaine and hookers every weekend kind of money. Their rent is $400, and again, they live alone.

But on the coast, you couldn’t live even with several roommates. You’d be homeless.

phoneymouse,

More than half the country is making bad money! We’ve been ripped off since the 70s. There was a Time article a few years back that calculated how if wages had kept pace with productivity, like it did up until the 70s, then Americans would be $50 trillion richer. Instead that money went to the rich. The rich has scraped off the $50 trillion in wages from the working class and that’s why everyone is paycheck to paycheck.

Fosheze,

I make $50,000 and I live alone in a 3 bedroom house (a fixer upper but decent enough) which I own in a decent part of my not even terribly small city (~50,000 people). And I live comfortably enough even though I put very little effort into budgeting. Only 3 years ago I was still living in the same house/area off of $30,000 and even that was technically livable. $55,000 in my area is decent money as long as you don’t go completely wild with it and it’s downright great in a dual income household. There are also areas of the contry that have an even lower cost of living than mine.

Once you get out of the metropolitan areas money usually stretches much farther.

OldWoodFrame,

I honestly don’t understand why anyone thought “buy now pay later” was anything new. Usury is among the earliest professions.

John_McMurray,

Says “no interest”, so it ain’t usury

echodot, (edited )

If you wait long enough to pay it back then there will be movement in the markets, so there is still going to be interest.

BreadstickNinja,

That only disbenefits the consumer if the economy goes through deflation. If the economy more typically sees inflation then it disbenefits the lender.

The problem isn’t change in purchasing power of the funds, but death by a thousand cuts. An extra $30 a month sounds reasonable - just a dollar a day - but when you layer on several of these at once then it quickly adds up.

rottingleaf,

Which is also why it was bad from the Christian and Muslim points of view in the Middle Ages.

We are used to blaming religion, but it sometimes by necessity filled the role of therapy back then, or laws which secular powers wouldn’t make.

FaceDeer,
FaceDeer avatar

A couple of weeks back there was an article making the rounds of the fediverse about how people with reasonably decent incomes were nevertheless living "paycheck to paycheck", and a number of examples were given in the article with their individual stories of woe about how they were baffled by how burdened with debt they were. Most of those stories, when you dug in with just a slightly critical eye instead of an automatic assumption of victimhood, revealed people making foolish choices to take on debt and support the maximally lavish lifestyle that they could manage.

The comment section was weird. It turned out that there were some people there who thought this was perfectly reasonable, giving examples of "necessary expenditures" from their own lives that were just as excessive when examined. If you think that building a deck or buying a new bed simply because it's "time for a new one" are necessary expenditures then it's kind of hard to be sympathetic when you complain about how you have no money for long-term savings.

Is there just some basic personality type that finds it hard to be responsible with money, or is this a failure of education somehow? I have ideas for how to help but help will be unwelcome by people who refuse to recognize that they have a problem.

John_McMurray,

Yes. Absolutely there is, the personality thing. It’s undiagnosed learning disabilities, ADHD or just a straight up person who would have been a well regarded hunter a different century.

force,

i guess dyscalcula kinda makes sense at an angle, but how do undiagnosed dyslexia and dysgraphia affect your financial literacy?

gandalf_der_12te, (edited )

Is there just some basic personality type that finds it hard to be responsible with money?

Yes, I believe there is. Why? Idk, anecdotical evidence.

Kyrgizion,

simply because it’s “time for a new one”

Depends. There are probably people who say that after a few years, and others use it for 10-15 before making that exclamation. In which case the choice for a new bed is (depending on your choice) no longer a luxury expense but a maintenance one.

tal, (edited )
@tal@lemmy.today avatar

I commented there, and while I do lean towards the idea that personal finance literacy is an issue, I don’t think that it’s purely a matter of self-control. I don’t think this is necessarily a “Bob knows that he should spend N and save X but instead spends N+X” situation. I think that some of it is that people do not really have a great idea of what they should be doing in terms of personal finance. Like, what is a reasonable amount to be spending? How much should I be spending on housing? How much should be going towards retirement? How much of an emergency buffer should I have? What should I do with money that I save?

SkippingRelax,

I think the answer is in your first sentence, personal finance literacy. At least in my case reading about it, learning the basics (six months expenses emergency fund, pay credit cards in full every month, invest in ETFs…) and understand other people’s strategies is all it took. Hate to say it but I owe reddit one for all that knowledge.

SkippingRelax,

Ah the person that complains they had to tap into their investments because you need to periodically get a new bed and redo your deck and can’t save money. Yes I got downvoted for providing basic personal finance recommendations there!

I think the problem is a combination of the things you mention, and the fact that society is just normalising stupid spending, waste of resources and spending everything you earn, if not more.

When on reddit, I was active on personal finance subs. The amount of people asking for suggestions on how to improve their budget that didn’t see anything wrong with 10-12 subscriptions for shows and music, on top of astronomic phone bills, eating out etc was crazy. At least they took the first step, wrote down their expenses, and were asking for help. The bed/deck guy was just pure madness.

cybervseas, (edited )

Is there just some basic personality type that finds it hard to be responsible with money, or is this a failure of education somehow? I have ideas for how to help but help will be unwelcome by people who refuse to recognize that they have a problem.

I think a few things come together to bring us here:

  • Modern education has completely abandoned teaching personal finance to kids.
  • Modern payment technology (credit cards, tap to pay, apple pay) have separated us all from the tangible feeling of spending our cash on stuff. Now we don’t even swipe a card or hand over a credit card to pay for something.
  • Influencers and social media create new, unrealistic expectations of lifestyle.
  • Highly targeted advertising on the web, in apps, and through paid influencers and social media, finds people at their most vulnerable moments and suggests that they buy stuff. Companies are targeting the weaknesses in our psychology and it’s hard to withstand that onslaught.
Anti_Iridium, (edited )

Edit: what I said was incorrect.

tal,
@tal@lemmy.today avatar

high-end sandcastle kit

I mean, we built some pretty neat sandcastles as kids with our hands. Dig a hole, put the sand in front of it as a barrier, scoop up sand+water from the hole and create “drip castles” with turrets and such that harden as they dry.

If you’re buying decorations, I’m thinking that it’s gonna be liable to wind up with plastic decorations or something left behind.

And in that case…I mean, the kid is 2 years old. I figure that she probably wants the best for him and all, but…I’ve seen a lot of 2-year-olds enjoy the box that a toy came in a lot more than the toy. I dunno if his sandcastle experience is gonna be so much more awesome with some kinda kit than just experiencing and learning how wet sand acts…

IsThisAnAI,

Idiots spend money they don’t have. News at 11.

ExcursionInversion,
@ExcursionInversion@lemmy.world avatar

$800 on a day trip to the beach?? Thats insane to me.

Also never understood why anyone would you those options, they have always seemed like trap. Have some self control

FlyingSquid,
@FlyingSquid@lemmy.world avatar

Why do you even need a tent for the beach? Are you camping out there overnight?

macarthur_park,

I imagine it’s more of a canopy than a sleeping tent. Something like an EZ up tent that provides more shade than just an umbrella.

I’ve used them and they’re pretty nice, especially if you’re going to be at the beach all day and don’t wanna get sun burned. That being said, it’s still a big purchase for just one day trip. I’d only invest in one if you were using it regularly, or had like a week-long trip planned.

FlyingSquid,
@FlyingSquid@lemmy.world avatar

I think I’ve seen those before. And I believe when I did, they were renting them out for the day like they do with chairs and umbrellas. Which I’m guessing is not uncommon at beaches.

macarthur_park,

Yeah, it would make much more sense to rent one for a day trip. Even a week vacation honestly.

FaceDeer,
FaceDeer avatar

I could see it being useful for keeping the sun off, serving as a refuge from insects (depending on the local biome), perhaps serving as a changing room for privacy. But yeah, it should hardly be necessary. Just another frivolous expenditure, only do it if you can genuinely afford it.

ShepherdPie,

Yes totally necessary if you’re going to have a 2 year old out in the sun all day, but you can also buy these at Walmart for $40.

partial_accumen,

If you’re spending $800 for one day at the beach its cheaper to get a day pass to a mid-to-higher end beach resort and rent a cabana. You’ll get a better experience, staff that will cater to your needs and still be cheaper than $800 for one day.

FaceDeer,
FaceDeer avatar

It could become a bit more reasonable when you consider that most of that gear is probably reusable, so if she expects to do day trips to the beach frequently the $800 gets amortized.

In this case, though, I wouldn't assume any forward planning like that was factored in to this.

SkippingRelax,

We both know that stuff will never be used again!

grimsolem,

So you shouldn’t take super high interest loans to buy crap online?

Planning a day trip to the beach with her 2-year-old son last year, she spent $800 on Amazon purchases including a tent, new outfits and a high-end sandcastle kit with the BNPL provider Affirm.

Nvm it was clearly unavoidable.

That report also found Black consumers were 65% more likely to borrow on BNPL than the general population, followed by Hispanic consumers (47%) and female consumers (35%).

Also racist and sexist 🤡

Eheran,

Why is that statistic racist and sexist? Sorry for not getting it.

John_McMurray, (edited )

It was sarcasm…also if you add black, hispanics and women together, you basically have the general population except white men.

BradleyUffner,

Why would you add those together? They aren’t distinct groups. They overlap.

Kit,

It says in the article that the loans aren’t high interest. They’re low to no interest.

trafficnab,

They’re no interest if you make the payments, if you miss one and keep a balance they can be 30%, which is how the services make money

Kit,

I’m sorry but you’re wrong. The specific BNPL loans being discussed in the article really are 0% interest and don’t have late fees. The entire point of the article is that this is so appealing to people that they overextend their finances to get things they don’t really need, and then get stuck making payments for years.

echodot,

They work like credit cards. If you pay off the debt then there’s no problem, you are essentially just pulling money from the future, when you will have it, into the past, where you don’t have it, which can be useful if you 100% know you’ll be able to cover your debt by the end of the month.

But if you are going to do that you might as well just have a credit card. Banks love it when you do stuff like that, their all time favorite customers are people who regularly pay off their debts and never require any communication from them. Banks don’t like it if they have too many people indented to them, because a certain percentage won’t pay off their debt. Banks have other less risky means of making money, mostly through safe mortgages and bank fees.

But these loan companies only make money by people having debt. So the risk reward calculation is different for them, so they actively encourage people to get into debt in a way that banks tend not to.

baru,

So you shouldn’t take super high interest loans to buy crap online?

In Netherlands they limited the maximum interest rate. Plus borrowers should check if people are credit worthy without that credit score. Basically it is assumed there are enough people who are terrible with their finances. The last bit is preferable over victim blaming.

doublejay1999,
@doublejay1999@lemmy.world avatar

That’s pretty recent I think - and it’s only limited to like 30% I think ?

Bakkoda,

I have a 800-810 credit score. I have positive networth. I have no mortgage, no student loans and one car loan with less than 5k left. The best interest rate on a credit card i could find was over 18%. I didn’t actually apply so the rate might go lower but still, that’s criminal imo.

Semi-Hemi-Demigod,
Semi-Hemi-Demigod avatar

Credit unions offer much lower interest rates. My credit card is 10% interest, and 8% for cash advances.

Bakkoda,

Yeah I’ve got no one to blame for me not looking into then more. I have a savings account with them for my “car loan” which is just me putting money away for the next car and it’s got a great interest rate. I really should move my banking to them but they aren’t really local.

IsThisAnAI,

Credit cards at any interest rate are stupid if you are carrying a balance. Take out a proper loan.

QuarterSwede,
@QuarterSwede@lemmy.world avatar

I had a 7.99% fixed card for a long time. Then after having a few kids we didn’t use it for a while and I went back to look at it they had raised the rate to 15.99% (this was years ago now). We also have credit over 800. Absolute garbage (yes, I know it’s in the TOS). Dropped them and changed companies to get the same 15.99% rate with other perks since the original didn’t have any.

These CC companies seriously need more regs. They can’t be trusted to do anything in the interest of consumers and don’t deserve their business anymore, quite frankly.

JovialSodium,

All credit cards are 0% if you pay the balance in full every month. Then it’s just a matter of if the perks are worth the fees (if that’s not something you’re already taking advantage of).

Edit: reworded to not use the word balance twice in different contexts.

Bridger,

Many of them have ‘hidden’ fees, annual charges etc that add up to a hefty chunk. Interestingly the credit cards offered to high net worth individuals (rich people) have much lower rates and no hidden fees, even things like automatic overdraft protection and robust identity theft protection not offered to the rest of us.

JovialSodium,

That’s a fair point. Credit card companies are not our friends, and it’s absolutely in character for them to try and nail us in the fine print.

For my part, I know of my annual fee and the rewards I get more than offset it (though not considerably) but it’s certainly not always so clear cut.

John_McMurray, (edited )

Yes, because they make their money from volume with them, instead of rate. Free overdraft protection being free to people who never overdraft with millions in the same bank…ffs…what a mystery

doublejay1999,
@doublejay1999@lemmy.world avatar

Where do you go when there are maxed ??

JovialSodium,

Note: I am not a financial expert. And my limited knowledge is for the US credit system.

You want your monthly credit use to be pretty low. I believe under 10% is generally considered good. If you have a low enough limit that maxing it is a concern, then you’ll want to limit the amount of your monthly expenses you put on a credit card.

Bakkoda,

I haven’t paid a balance in a decade but here’s the thing: I’m probably a small minority of your <250k earners. Combined our household AGI is ~150k so it’s anecdotal at best. For those who have to use the card it’s stacked so far against them it’s insane.

John_McMurray, (edited )

Not in Canada. They’re 3 percent but only at purchase. I dont use my cards no more.

tal,
@tal@lemmy.today avatar

Plus borrowers should check if people are credit worthy without that credit score.

I assume you mean “lenders”. I mean, sure, they’ll check and they have expertise in finance, but the job of a lender isn’t to handle a borrower’s personal finances in a sane fashion. The job of a lender is to avoid being defaulted on. Like, they’ll permit the absolute maximum amount of debt that they’re comfortable with, which probably is more than what a borrower should be comfortable with.

SkippingRelax,

In Australia, at least at the beginning, bnpl services managed to bypass all money lending regulations based on the fact that they don’t charge interest. I know that there were discussions about fixing that but haven’t been following the topic in a while.

Like the other person, I also assume you meant lenders, not borrowers. Lenders WANT people that are terrible with their finances. Visa makes very little with me paying off my credit card in full every month, just some merchant fees. On the other hand plenty of Australians are in constant credit card debt and pay something like 18-22% interest on the money they borrow.

Good on the Dutch government to try and control that.

QuarterSwede,
@QuarterSwede@lemmy.world avatar

The main issue is parents (and the school system) aren’t teaching kids about budgeting and how CCs work because they don’t know how it works either. It’s perpetuating.

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