Buy with Cash or Installment?

My friend just moved into his new house with all new furniture, TV, sofa, fridge, washing machine, dining table, coffee table, chairs and etc. In our conversation, I can feel that he really feels proud with his lovely designed and fully furnished house. Yes, I am happy with him also because he has worked for more than 5 years and this is his first house.


People always like to compare. So, we were comparing the price of each thing in his house with mine that I bought earlier. Most of the things had increase in price recently, but the LED TV is much cheaper than last time.


The biggest difference between him and me is not the price of those furniture in fact, but the way of payment. He is doing zero interest repayment plan for most of his things. He made monthly payment for his TV, dining table, sofa, washing machine and etc for a period of 1 to 3 years. He said that zero interest plan is good because he can buy things in bulk with less burden.


On the other hand, I buy most of the things using cash in hand with more discounts. I am not showing that I am rich, but I have a free interest investment plan for myself, which can eventually reduce my debt.


To me, zero interest repayment plan is enticing you to use your future money for your present. This plan is designed by businessman for them to squeeze your money out from your pocket, even worse, it’s your future money. They so call this plan as buy first, pay later; or use first, pay later; or you own it first, pay later. The gorgeous and attractive promotion phrases are delivering an incorrect and blurry message that you can ‘buy’ many things without paying a lot at the present time. But sadly, you become a person with full of debt.


Teenagers nowadays are poor. Do you agree? No, I can’t agree that. They are not financially poor, but poor in financial management and investment knowledge. They are not being taught to manage their money properly during school time, but being taught to spend their money more than they can earn in this society nowadays! And this society is encouraging you to use your future money so that you can live better now.


Why go for zero interest repayment plan, and not a free interest investment plan for yourself? Before I bought furniture for my house, I did monthly ‘payment’ to mutual fund for around 3 years, I get free interests. My friend bought the furniture and did monthly payment with zero interest to the bank for 3 years. I save and invest my money upfront, my friend buy and pay later, which plan do you think is better? In mutual funds, my money grows with compound interests, and I get more discounts with cash buy.


An important message that I want to deliver here is: Learn how to invest now, not how to pay later. You can become richer, and even financially free if you have a good financial planning for yourself NOW. Do not drop in the comfortable trap of zero interest repayment plan.