A) [Carpet Price + $572] with 24 months, 0% financing
B) [Carpet Price + $0] with 6 months, 0% financing
Here’s the back-story: So Mrs MMD and I are buying new carpet for our house. We find something we like and we sit down with the sales representative to go over pricing. He gives me Option A with a price that just sounds wrong (of course I calculated out what the price should be ahead of time). When I interrogate him on the cost, I find out he is charging $660 for the installation. Anyone who has ever shopped for carpet knows that pretty much everyone who sells carpet always offers the equivalent of about $100 for installation. So when I bring this to the sales representative’s attention, he promptly offers me Option B which has $88 installation but a shorter financing term. I actually paused for a minute because I thought he was joking…
Obviously Option B is the better of the financing offers! For Option A to be a better deal, I’d have to cover the opportunity cost for making a guaranteed $572 within 18 months by spending a pretty ridiculous sum of money (more than carpet should cost).
Coincidently, this all happened on the same day as my Why Do Poor People Have Two or More Flat Screen TV’s? post was published. In keeping with one of my many theories in that post about how consumers are being taken advantage of, I feel like this situation is yet again another example of where the average Joe gets duped into taking deals that are not necessarily the best. What if I hadn’t asked questions and got to Option B? What if I wasn’t smart enough to recognize that an immediate $572 savings is much better than stretching out my payments for an extra 18 months? As consumers, it is inevitable that we will need to buy things, and we have only ourselves and the resources we trust to aid in making the best possible decisions we can make.
Blog News:
In anticipation of the big one-year anniversary, next week’s blog posts will be all about blogging. The first will be silly – a recap of all the dumb stuff I did over the course of the year. The second will be a little more serious and will reflect some of my goals and directions going forward.
Blogs You Should Check Out:
In case you missed them, here are a few great stories you should check out this weekend:
- Have you ever met your twin? Jessica did and it turns out she also has her own blog! What were the chances? Read My Blogger Doppelganger! by Mo Money Mo Houses.
- Lance has got a system in place for paying off his debt that I can identify with. Read Our Debt Pay Down Strategy on Money Life and More.
- When did you first realize that you weren’t going to be a rock star or make a career out of your hobby? Sydney talks candidly about here experience with photography in When Is It Time To Quit? Why I Gave Up My Dream on Untemplater.
- Did you follow Jeremy’s advice on using Keywords? You better – because he’s ready to move on to Lesson 2! Read Effectively Using Keywords On Your Blog – Part 2 on Modest Money
- I’m a big fan of reading other people’s stats; especially if the blog is similar in age to mine. Jason shares his latest info on Blog Income and Site Statistics – July 2012 on Work Save Live.
Carnivals:
MyMoneyDesign was featured in the following personal finance carnivals this week:
- Weekend Ramblings – Mandarin and Chinese Domination Edition
- Carnival of Money Pros – The Summer Olympic Edition
- Lifestyle Carnival – 14th Edition
- Mars Rover Curiosity, Happy August and a Finance Carnival
Thanks again to all my new and returning visitors. I really appreciate your support and hope you continue to enjoy my site!
Posts This Week:
1) Book Review: Rich Dad Poor Dad by Robert Kiyosaki
2) Why Do Poor People Have Two or More Flat Screen TV’s?
Photo Credit: Flickr
Wow that’s crazy that they’d jack up the carpet installation price in exchange for the longer financing. People who aren’t well off are all over those store financing options. Little do they realize what the true consequences are.
Thanks for the mention MMD. I’m looking forward to your blog anniversary posts.
Once again, the power of “ask a lot of obvious questions” works out for MMD again. Had I not asked, I guess I would have never got the $88 installation deal?? Seems a little shady …
Thanks for the mention! That is horrible that they pulled that but a lot of people probably wouldn’t have questioned it. Did you ask what price you’d get if you paid cash today? I wonder if that would have been any different…
Thanks Lance. Unfortunately, the price would have stayed the same if I paid cash. That too seems weird to me since usually when a store offers interest free financing, they EAT the interest charges (which are usually reduced but still there). So I think you’ve got a valid point!
That’s absolutely crazy. It’s a good thing you’re an informed consumer! Thanks for all the reading. 🙂
No problem! You have to be pretty slick to pull some math trickery on ole-MMD! 🙂
It’s great that you caught what was going on with the carpet installation. Sometimes consumers think the extended financing terms are better. As you pointed out in this post, it is not. Good thinking.
You’re right! If you were hurting to make payments, then on the surface the longer term may have seemed like a better deal. But when you put things in perspective of the $580 delta, there really is no contest.
This proves that there are no free lunches. You have to be prudent with your money. It’s always better to pay now than later, because interest will add up quickly.
In some ways, I think you actually hurt the carpet store more by taking the shorter deal! Oh, well though. It’s their offer!
Thanks for the mention! I love new carpet, especially the super plush kind but I know that’s not good for my allergies.
Congrats on your 1 year anniversary!
Thanks Sydney! And welcome to the site!