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Or you can afford the camera outright, right now. What's better out of these options: 1) Buy for cash the camera now. You don't have any cash in hand afterward

Or you can afford the camera outright, right now. What's better out of these options: 1) Buy for cash the camera now. You don't have any cash in hand afterwards, and the camera is depreciating in value immediately as an asset only offset by whatever you do with it. 2) Buy via BNPL with no interest for 12 months, and pay exactly a 12th a month. You have the camera, but you also have 91% of your cash in the bank that /does/ get interest or can be used for anything else like investing in shares. You still have liquidity and can assumedly use the camera to generate some cash doing weddings or whatever as part of your hobby for one year. 3) Save cash where you are getting similar rates of interest as 2 for 12 months once you've identified you need something. Buy the camera a year after you needed it, you have lost the opportunity of 12 months revenue from maybe one wedding a month? The price is either affected by inflation after a year, or more hopefully its gone down due to competition with other models, but who knows. Also do you still need a camera? you've certainly lost out on a years experience to know if it was worth it. BNPL makes plenty of sense if you can or cant afford something, more so if you can.

ivanche 4y ago
If we are to make up scenarios, I can take $5,000, go to a casino, observe roulette wheel and bet on black when I notice bias. Bam, I now have $10,000! I am the smartest guy ever! Seriously, OP never mentioned investing in a business equipment but wanting a camera. Also, that camera will depreciate no matter how you paid for it, but you conveniently mentioned it only in the scenario 1.
- Ultimatt 4y ago
  Because I assumed you'd understand the depreciation of the asset is a lot less than the appreciation on your investments or cash that you can do in the other scenarios. The entire point is its offset. Also that's not a business asset description, thats just normal life??? WTF buys a camera and doesn't offset some of the cost doing their mates wedding? You're not thinking rationally if you think using the credit system is comparable to a roulette wheel. You control its use. You can just clear the debt if its interest free, its not grown or changed. The credit system is designed around returns for people who can't afford something at all. It's utterly predatory, but if you financially are entirely above the risk of paying interest its just a lot of flexibility in preserving your cash capital.
  - ivanche 4y ago
    Moral aside of shooting mates' wedding and charging for it(!), but as soon as you use equipment to earn it's a business/side gig. You may not like it but I'm sure tax authorities of any sane country will disagree with you. For the rest I actually agree with you and think credit system is predatory and that if one can, one should take advantage of it. Just that buying something on credit because want, and using that something to earn money are two fundamentally different cases.
    - foldr 4y ago
      Why is it a problem if it’s a business or side gig? In the UK at least that just means that you need to report the income on your tax return if it’s above a certain amount. It’s not difficult. I’m not sure I’d describe countries that make you do more than this as ‘sane’.
    - Ultimatt 4y ago
      Dude what world (or country) do you live in? Im in the UK and everyone has a £1k self employment allowance, that gets you quite a nice camera! Filling out the return is trivial.
dusted 4y ago
I disagree, it's death by a thousand paper-cuts. Having my funds reduced to 91% the rest of the year is waaay worse for me, than having it reduced to ~0% the rest of the month. Because, the rest of that month, I'll be super-vigilant, I'll be acutely aware of why I have less money than normally, I know not to make anymore purchases, I know that this month is not for an extra treat, because I bought the other thing. Next month I'll be back up to 100% capacity. This affects my model of my financial situation, because, it's a camera then.. ~91%, it's a new toaster there ~86% and then ~40% and ~20% and now I get into the dangerous "poor" mindset, it's well proven (and I can personally attest to this being a very real effect) that having less money makes it harder to be financially vigilant, there's opportunity cost* for once, but there's also a tendency to "treat" oneself more because things feel tight, there's a tendency to short-sighted savings (the more expensive pr roll toilet paper, versus the cheaper bulk option that has higher up-front cost for instance). Now, to begin with, I'd go into "savings" mode a month before buying something expensive, so that I'm not at ~0% for a month, I'd never do that. * Sure, there could be 100% opportunity cost right after paying in full for something, but the recovery to full capacity is also quicker. I really prefer the large, immediate consequences over the smoothed-out slow-squeeze.
- KptMarchewa 4y ago
  So the weakness is your psychology not the business model.
- e63f67dd-065b 4y ago
  This looks like a weakness in managing your personal balance sheet. You're willingly sacrificing cash flow and interest to simply balance sheet management, which may be worth the tradeoff for some but for those of us with the required skills it's really not.
  - muro 4y ago
    There are better ways to spend life than optimizing cash flow.
yellow_postit 4y ago
Cash flow optimization is a useful skill but it’s on the fringes for sure as BNPL main revenue is from their interest.
tengbretson 4y ago
Any amount of debt creates a degree of moral liability. The more that your possessions become contingent on the continuation of your cashflow, the less you are able to push back against things that you know are morally wrong. Do you think you would be strong enough to tell your boss "no" if it could mean losing all of your valued possessions?

ivanche 4y ago

If we are to make up scenarios, I can take $5,000, go to a casino, observe roulette wheel and bet on black when I notice bias. Bam, I now have $10,000! I am the smartest guy ever! Seriously, OP never mentioned investing in a business equipment but wanting a camera. Also, that camera will depreciate no matter how you paid for it, but you conveniently mentioned it only in the scenario 1.

Ultimatt 4y ago
Because I assumed you'd understand the depreciation of the asset is a lot less than the appreciation on your investments or cash that you can do in the other scenarios. The entire point is its offset. Also that's not a business asset description, thats just normal life??? WTF buys a camera and doesn't offset some of the cost doing their mates wedding? You're not thinking rationally if you think using the credit system is comparable to a roulette wheel. You control its use. You can just clear the debt if its interest free, its not grown or changed. The credit system is designed around returns for people who can't afford something at all. It's utterly predatory, but if you financially are entirely above the risk of paying interest its just a lot of flexibility in preserving your cash capital.
- ivanche 4y ago
  Moral aside of shooting mates' wedding and charging for it(!), but as soon as you use equipment to earn it's a business/side gig. You may not like it but I'm sure tax authorities of any sane country will disagree with you. For the rest I actually agree with you and think credit system is predatory and that if one can, one should take advantage of it. Just that buying something on credit because want, and using that something to earn money are two fundamentally different cases.
  - foldr 4y ago
    Why is it a problem if it’s a business or side gig? In the UK at least that just means that you need to report the income on your tax return if it’s above a certain amount. It’s not difficult. I’m not sure I’d describe countries that make you do more than this as ‘sane’.
  - Ultimatt 4y ago
    Dude what world (or country) do you live in? Im in the UK and everyone has a £1k self employment allowance, that gets you quite a nice camera! Filling out the return is trivial.

dusted 4y ago

I disagree, it's death by a thousand paper-cuts. Having my funds reduced to 91% the rest of the year is waaay worse for me, than having it reduced to ~0% the rest of the month. Because, the rest of that month, I'll be super-vigilant, I'll be acutely aware of why I have less money than normally, I know not to make anymore purchases, I know that this month is not for an extra treat, because I bought the other thing. Next month I'll be back up to 100% capacity. This affects my model of my financial situation, because, it's a camera then.. ~91%, it's a new toaster there ~86% and then ~40% and ~20% and now I get into the dangerous "poor" mindset, it's well proven (and I can personally attest to this being a very real effect) that having less money makes it harder to be financially vigilant, there's opportunity cost* for once, but there's also a tendency to "treat" oneself more because things feel tight, there's a tendency to short-sighted savings (the more expensive pr roll toilet paper, versus the cheaper bulk option that has higher up-front cost for instance). Now, to begin with, I'd go into "savings" mode a month before buying something expensive, so that I'm not at ~0% for a month, I'd never do that. * Sure, there could be 100% opportunity cost right after paying in full for something, but the recovery to full capacity is also quicker. I really prefer the large, immediate consequences over the smoothed-out slow-squeeze.

KptMarchewa 4y ago
So the weakness is your psychology not the business model.
e63f67dd-065b 4y ago
This looks like a weakness in managing your personal balance sheet. You're willingly sacrificing cash flow and interest to simply balance sheet management, which may be worth the tradeoff for some but for those of us with the required skills it's really not.
- muro 4y ago
  There are better ways to spend life than optimizing cash flow.

yellow_postit 4y ago

Cash flow optimization is a useful skill but it’s on the fringes for sure as BNPL main revenue is from their interest.

tengbretson 4y ago

Any amount of debt creates a degree of moral liability. The more that your possessions become contingent on the continuation of your cashflow, the less you are able to push back against things that you know are morally wrong. Do you think you would be strong enough to tell your boss "no" if it could mean losing all of your valued possessions?