I have always been money conscious and from a very young age started working with a budget so that I could save and pay cash for the things I wanted instead of using credit. Or if I did use my credit card I was taught by my parents to pay this off before the due date and have always stuck by this rule.
Another thing I did a lot of was lay-by. It was a good way to secure something I really wanted but hadn’t yet saved for. The good thing about lay-by back then was it didn’t cost you anything. So long as you made regular payments and paid it off within a reasonable timeframe there was no interest and no fees.
Whilst lay-by still exists today I don’t think many people really use it because there are so many more options available and it seems we live in a society that wants everything NOW, so people are too impatient to pay something off.
Buy now, pay later
One of the newer kids on the block is the ‘buy now, pay later’ service such as Afteray, Zip, Openpay and PayRight. These services make their money by charging retailers a fee for using the service as well as charging customers late fees.
Used correctly these services can be great if you really want something but haven’t yet saved for it, so long as you pay it off on time. Unfortunately, as with any type of credit if not used correctly it can start to cost you a lot of money and even cause financial stress. People seem to be coming unstuck with this type of service because they have several on the go at any given time and cannot keep up with the payments therefore incurring numerous late fees.
First home buyers beware
If you are a first home buyer and looking to acquire finance to purchase a home or investment property in the near future, it is critical that all your payments are up to date for any existing credit, including these types of services, as lenders are starting to take into consideration how often you use these and if you’ve missed any payments when considering you for a home loan.
It’s very tempting and very easy in this day and age to purchase things that you haven’t yet saved for. Set some rules for yourself, understand your bigger goals and put a budget in place to help you manage your finances.
Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility apply.
