A few days ago, I got sucked into the ultimate rabbit hole of conversations – an argument over whether buying one of the new $1,000+ iPhones is a smart financial move. Ugh.

I have to admit, I’m clearly not an electronics person. If my phone even works half the time, I’m pretty happy. So, I was obviously on Team I-Don’t-Give-AF about phones. In the other corner were people who are more enthusiastic about phones in general.

While enjoying electronics isn’t itself a bad thing, here’s the part of the conversation that rubbed me the wrong way: One person tried a little too hard to justify financing an iPhone. Since practically nobody has any meaningful savings, this is obviously the path most people take. And, let’s face it; it’s easier to get the phone you want if you just finance it for 12-24 months.

Their basic argument was this: Financing an iPhone isn’t that bad because you’re not paying interest on the purchase. You’re simply spreading the payments out over 12-24 months. You know the phone will be outdated shortly and you’ll want to upgrade next year anyway, so why not?

Of course, the conversation didn’t end there.

Digging In My Heels

When I voiced my displeasure over that general mindset, other stuff came up. What about people who finance furniture for 24 months to take advantage of 0 percent APR for a few years? What about people who buy new cars to take advantage of special financing deals?

And, how about people who take out HELOCs to remodel their house instead of saving up the money in cash?

Here’s what I think: Most of the time, these things happen because someone with a debtor’s mentality wants something they can’t afford. They can’t wait to save up the money – and they can’t go without, either. So, what do they do? They find a way to finance their splurge and make monthly payments for as long as it takes.

And that’s exactly why the majority of people will finance their new $1,000+ smartphone. They can’t afford it, they know it’s ridiculously expensive, but they’re willing to bury their heads in the sand and pay $30 per month anyway.

Because – what the heck Negative Nancy (that would be me) – it’s only 30 bucks.

Wishful Thinking and the Debtor’s Mentality

But, it gets worse… and I’m about to bring up one of my BIGGEST PET PEEVES.

A few people in the comments championed the concept of “using other people’s money” to build wealth. Or something like that.

The idea is this: If you borrow money at 0 percent interest for a smartphone or a car or whatever, you free up cash to invest and end up with even more money!

If I had a dollar every time I heard someone rationalize a ridiculous car or furniture purchase with this excuse, I would be rich!

You've seen them all: Zero percent interest. Cell phone finance plans. 24 Months Same as Cash. Here's why these financing options are all a terrible idea.Somehow, people convince themselves that spending $30,000+ on a new car or $5,000 on new furniture is a good deal because they’re not paying interest. It probably never crossed their mind that they probably spent more than they can reasonably afford to get that 0 percent offer in the first place!!!

And when it comes to cars in particular, the idea of buying new just irks me. Never mind the fact that new cars mean bigger insurance payments, pricier plates, and higher taxes. They’re not paying interest on their overpriced 8-person SUV, so they totally scored!

And, oh-my-gosh you guys, it gets better. Their sales guy told them they would end up ahead because they can totally take the lump sum they would have spent and invest slowly instead. How many times have you heard that line?

Here’s a question for you: How many people who finance iPhones do it so they can invest more this year? And how many people finance a sectional sofa because they’re hell-bent on maxing out their Roth IRA?

One final question: How many people who finance a new car have the cash in the bank to pay for it?

The answer to all of those questions is the same – almost no one.

Stop Making Financial Decisions Based On Wishful Thinking

In a perfect world, people would finance big purchases at 0 percent APR so they could save for college, max out their 401(k)s, and keep prepaying their mortgage. They would use other people’s money to buy things they need, while using their own money to further their financial goals.

But, in the real world, almost none of that happens.

  • Fact: More than half of Americans have less than $1,000 in savings in 2017. (Source: GoBankingRates)
  • Fact: The average American household with debt owes over $16,000 on their credit cards. (Source: U.S. Census Bureau and the Federal Reserve)
  • Fact: In 2017, the average new car loan was for over $30,000 and nearly 70 months long. (Source: Experian)
  • Fact: The average college graduate left school with over $37,000 in student loans in 2016. (Source: Student Loan Hero)
  • Fact: In 2017, 49 percent of Americans are living paycheck-to-paycheck. (Source: CNBC)

Like it or not, most Americans aren’t financing iPhones because they’re saving their cash for something more important. They’re financing these items because it’s the only way they can afford to buy something they want.

Instead of saving up the cash for their new kitchen or iPhone 8 or 65-inch curved flat screen (those are awesome BTW), they just finance it and let their future self worry about how to pay.

Normal Equals Broke

0 percent APR offers. Monthly payments. Cell phone finance plans. 24 Months Same as Cash.

These things seem totally normal if you are perfectly okay with making #paymentsforlife. But please, do me a favor. Don’t try to convince me that financing a $1,000 smartphone is an acceptable way to manage your money. It only seems normal because everyone is doing it.

Most people would be better off without the stress of juggling monthly payments for everything from their smartphones to their furniture. And nobody needs a $1,000 phone… ever. Anyone who tells you otherwise is lying or trying to sell you something.

Finally, let me finish with something I usually say about Disney vacations:

If your phone costs so much it takes you years to pay for it, it’s too %!$#@#@!$@! expensive.