Same as cash?
I state in my book that: 12 months same as cash is not the same as cash. This is why.
The only thing that is the same as cash is cash. 12 months same as cash is rarely a good idea. Let's say that you put $1500 worth of furniture on 12 months same as cash. And let's assume that you don't really have $1500, but you think you will have it 12 months from now. Well, that is terrible terrible thinking. Lots of things can happen in 12 months, and you will likely incur finance charges.
Let's assume that you have $1500 now, but that you want the use of the free money for 12 months. Let's also assume tha you are receiving 3% on your money. Therefore, by using 12 months same as cash, you make $45. Is $45 dollars worth testing the powers of uncertainty? I would say no. You will notice that the only products offered at 12 months same as cash are products that you don't really need. Why would you take financial advice from a guy trying to sell you a washer and dryer? Pay for it, or don't. Don't put your money in purgatory for 12 months.
More Q&A with Dollar Bill coming soon!!!
The other issue is the mental burden. We've done 12 months same as cash a couple of times, and though we've been fortunate to pay-off in time, the mental burden each month of seeing that bill (you only have 7 months left!!!!) causes more stress than the $45 gain is worth!!!
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I think this truth is magnified with cars. 72 months, 0% "same as cash" they say? well, that 3-year-old $30,000 SUV with 40,000 miles (oops, that warranty just expired) just turned lemon. you still owe $15,000 on it, but how much is it really worth now? you may break even on it if you find a sucker.
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You also have to take into consideration that if you have cash when you are making a purchase, you have more negotiating power on the purchase price. Most retailers will drop the price on products purchased with cold hard cash.
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