this post was submitted on 30 Mar 2024
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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?’”

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[–] [email protected] 39 points 7 months ago (6 children)

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.

[–] [email protected] 17 points 7 months ago

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.

[–] [email protected] 14 points 7 months ago* (last edited 7 months ago) (1 children)

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.
[–] [email protected] 3 points 7 months ago* (last edited 7 months ago)

Edit: what I said was incorrect.

[–] [email protected] 8 points 7 months ago

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.

[–] [email protected] 8 points 7 months ago* (last edited 7 months ago) (1 children)

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?

[–] [email protected] 2 points 7 months ago

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.

[–] [email protected] 5 points 7 months ago (1 children)

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.

[–] [email protected] 0 points 7 months ago

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