By JLP | February 20, 2008
Sorry for the confusing title but I couldn’t think of another way to say it.
I was reading NCN’s plan for life after debt
and it got me to thinking about the following question:
Let’s say you have a sizeable savings account and have allotted $2,000 of your savings for a new TV. You go shopping and find the TV you want and the total comes to right at $2,000. You are about to pay cash when you find out that the store offers 0% financing for 18 months. If you decide to take advantage of the 0% offer (assuming there’s not a deal for paying cash), are you taking on debt even though you have the cash to pay it off at any time?
Now I realize there are all sorts of “what if…” scenarios that could go along with this situation. However, lets just say that you are disciplined and would not charge the TV and then go spend the $2,000 cash on something else. Also, keep in mind that you aren’t spending money you do not have as we have assumed that you saved up for the TV. In other words, you’re not buying now and paying later.
Personally, although you are taking on debt, I see nothing wrong with taking advantage of the 0% offer. In my opinion, it really isn’t debt if you have the resources to pay it off at any time but choose to not to. I look at it as a way for a smart person to use debt for their own benefit even though the benefit is relatively small (about $91 if you get a 3% interest rate on your savings for 18 months and less if you have to make monthly payments since you will be drawing down your $2,000 over the 18 month period).
Now it’s time for you to weigh in.