Forgoing Payment Plans
This is the method that has helped me keep the most money in my online savings account the last several months. A quick rundown:
- In November, I enrolled in a yoga teacher–training program. I could pay the total amount up-front, or I could elect a monthly payment plan. At the end of the training, the monthly plan would cost $500 more than paying in full.
- In January, I joined Ramit Sethi’s Earn 1K program. Earn 1K had a similar structure, where paying in full was less expensive in the long run than monthly payments.
- I started going to a new wellness center to address shoulder and back pain, and the start-up program was 15 percent less if I paid in full.
When I added up the savings, I started to see how savings begets savings. When you have a handle on your finances, there are many instances in which you can pay less. I imagine that wealthy people, or at least those who were taught good money habits at an early age, would probably laugh at my little revelation, finding it hilariously obvious. Oh well—better late than never, right?
This May Not Be for You
I think this concept, while useful, also deserves some words of caution. A few guidelines on the tactic of paying in full:
- If you are still paying off debt, paying in full may not be appropriate just yet.
- If you can only pay the full amount using a credit card that you can’t pay in full, this is definitely not appropriate for you. And it doesn’t even count as paying in full.
- Only pay in full if you know for a fact that you will use the product or service. For example, if you never stick to an exercise plan, think twice about buying a full year of personal training sessions. Start smaller to establish good habits.
- If you do commit to a year of training sessions (or anything else), make sure there’s a money-back guarantee or loopholes if your situation changes. In the yoga program, if I had to quit, I’d be refunded the percentage of the course I didn’t attend. Earn 1K offered a money-back guarantee. Terms should be fair to both buyer and seller.
Feel free to add more guidelines in the comments if I’ve left anything out, and if you have an example to share, share it!
J.D.’s note: Yes, yes, a thousand times yes! I’ve noticed this myself, and it’s one of the best parts of being out of debt. Plus, when you have control of your finances, you’re able to take advantage of unexpected deals and opportunities.
Originally published on GetRichSlowly
