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Piano Now, Pay Later? | YNAB


Nov 11, 2023


This fall, my spouse and I dropped our solely youngster off at school. I knew it was going to be a troublesome adjustment for me. So I did what any gadget- and music-obsessed dad would do: I purchased a piano and put it of their room.

Now, as a lot as I might have preferred to nab a Bösendorfer Imperial live performance grand, it may need been tough to get it by the door of our small condominium, and the $300,000 price ticket was problematic. Moreover, my piano abilities might be described as “Chopsticks.”

So as a substitute I made a decision on a preferred mannequin of Yamaha digital piano. With a keyboard stand, bench, and maintain pedal, the worth got here to $975 together with gross sales tax. Let’s name it $1000 for simplicity.

Now, I don’t find out about you, however to me, $1000 is some huge cash. I spent loads of time researching and saving up for the piano. When it got here time to purchase, the retailer supplied me quite a lot of zero-interest Purchase Now Pay Later (BNPL) choices. Three installments of $333. Six installments of $167. Even 36 installments of $27.78!

And that acquired me pondering. Despite the fact that I’d saved up the complete worth, couldn’t I beat the financing corporations at their very own recreation by signing up for considered one of these affords and letting the cash sit in my high-interest financial savings account whereas making the funds? Absolutely the curiosity I’d earn on $1000 can be sufficient to make the minor further effort value it, proper?

Now, I’m not simply Piano Dad. I’m additionally Spreadsheet Dad, so I cooked up a spreadsheet to reply that query. I simply immediately acquired an electronic mail from my financial institution telling me my rate of interest went as much as 2.5%, so let’s assume I’d earn that fee on my financial savings all through the payoff interval.

After I calculated how a lot I’d save by paying off in six installments and maintaining the curiosity earned, I used to be shocked, and never in a great way.

The reply is $5.22.

5 measly bucks for the effort of setting this fee plan up in my funds and the twinge of fear that I’d by some means miss a fee and pay a late payment that will undoubtedly be far more than $5.

Then I appeared on the fantastic print. There’s a $15 “processing payment” for utilizing the six-month installment plan. Despite the fact that I might earn curiosity on my cash for six months, I’d be out $10!

The 36-month plan is a bit more attention-grabbing. That one has a $20 payment, and I might earn $37.33 in curiosity over that interval, which places me $17 forward. Besides that this plan requires signing up for the shop bank card, which might imply giving up the two% money again that I earn with my common card. That may price me $20, so now I’m $3 behind on the finish of 36 months.

Now, some BNPL plans are really freed from curiosity and charges (so long as you pay on time), however they’re usually short-term. Learn the fantastic print—“0%” financing on a bank card equivalent to My Chase Plan or Amex PlanIt virtually at all times comes with a set payment that’s going to be bigger than any curiosity you possibly can earn if you happen to’ve already saved up the cash in your buy.

For a short-term fee plan, the curiosity you earn goes to be peanuts. Selecting a Purchase Now Pay Later plan when you possibly can afford to pay money isn’t like profiting from bank card rewards or signup bonuses. You’re going to pay surprising charges, complicate your funds, and threat paying late charges or curiosity if you happen to make one mistake—all to perhaps save just a few {dollars}.

There’s yet another threat I didn’t point out, and I hesitate to convey it up, as a result of I’d prefer to faux it doesn’t apply to me. I’m very excited concerning the piano proper now, as a result of it’s model new. Am I going to really feel the identical method, say, 18 months from now? I don’t know. However I do know that if I get tired of the piano and it joins my Closet of Not often-Performed Devices, I might be very annoyed if I used to be nonetheless paying month-to-month for it at the moment.

So I made a decision to pay money for the piano, and I’m actually having fun with it—thanks for asking! My neighbors might have a special opinion.

Arrange a saving plan in YNAB to make these large purchases a actuality with out having to emphasize about fee plans. Unsure the place to begin? Take this quick quiz and get a customized template to get you saving very quickly!


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