WHEN should I start focusing on paying down my debt? Now or later?

Got some credit line debt from purchases of food and stuff, like 1000 usd or so, now I ordered the Apple Watch Series 5 on credit too.

I am tempted to sell everything I got and cancel the AW order and pay off debt but it would not make much difference right now as I am still a student with very low "income".

Maybe its better to just focus on studying and when I am done be real intensive about paying it off and selling everything then? Don't have a watch right now so really eager to get my hands on the AW.  Also got quite some student loan debt, but at very low interest rate. 

Why is it so hard to make these decisions? 

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  • Credit accelerates the timeline -- you get stuff now rather than later. That comes at a price (aka interest), so you have to decide if you're willing to pay that price. Let's just say the consumer credit slope is very slippery, and eventually some people can only keep up with the interest payments -- making negligible progress on the principal. With a low income, you would be more likely to be in that undesirable situation.

    BTW, if you have a cell phone, that will tell you the time as well. 😉

    Like 4
  • Lumion said:
    Why is it so hard to make these decisions? 

     Do you have a budget which is outlining your priorities for your money?

    Like 1
  • Yes I know all this but its so hard to stay true to it and not make excuses. I guess my ADD makes it hard for me to see long term damages. 

    - What is a LOC? 

    Thank you all for helping out.

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      • Lumion
      • Lumion
      • 6 mths ago
      • Reported - view

      Mango Box yes I have the same setup, the thing is I know I that of I am gonna spend cash on the purchase it will take me like a year to afford it. But I guess that's how you stay in debt too. 

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 1
      • Reported - view

      Lumion YNAB will help you see what else you're giving up/delaying as a result. Make sure you're OK with the consequences of every spending decision.

      Like 1
  • If you are taking on debt to pay for needs like food, that's a sign you are already over-extended. If you absolutely need a watch, get a $25 Timex. Don't spend money you don't have when you're already in debt and don't have the income to pay for extras. When you are done being a student and have a real job, then you can see if you have room for it in your budget.

    Like 8
      • Lumion
      • Lumion
      • 6 mths ago
      • Reported - view

      nolesrule yes that would be the smart thing to do, but why do I feel like I can get away with paying installments for it now as a student? 

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • 10
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      Lumion

       

      Lumion said:
      but why do I feel like I can get away with paying installments for it now as a student? 

       Because that's what they want you to think.

      With the exception of our house, we have not purchased anything on installment or taken on debt to buy something since the last payment on my wife's car a decade ago, and we are much better off for it.

      When much of your income is tied up in installment payments, you have no flexibility or freedom. Avoid the mindset of "if I can afford the payments, I can afford this thing I want".

      Turn it around. Use your budget to make those installment payments to yourself, and then when the money has accumulated, you can decide if you still want to purchase that thing you wanted and not be tied down to a debt.

      Like 10
  • Lumion said:
    why do I feel like I can get away with paying installments for it

    Because instant gratification is easy and feels good right now. In spite of the fact it may not be in your best interest beyond the moment. 

    Like 5
  • I completely get how easy it is to 'buy now, pay later'. I recently lost my smart watch. My first gut reaction was to run to Amazon to buy a new one (and an updated new one at that). I have an Amazon credit card - it won't add TOO much to my debt! But YNAB has helped me take a moment to think the purchase through. I still looked up the cost of the watch (and a protective screen and extra wrist straps) but instead of buying it now I made a category for it in my Wish Farm. I miss my watch but oddly enough, whenever I budget, I don't seem to put as much money towards the watch as I thought I would given how much I was tempted to splurge initially. It just isn't my top priority as much as debt paydown or being a month ahead. Now, when I do fund it completely and buy it,  it will be a conscious choice without debt attached.

    I also have an installment plan on my phone from a year and a half ago. I wanted that new phone so badly but now I wish I had the $35.00 a month that is tacked onto my bill each month more. So my goal is to pay it off in full soon and get that bit of monthly wiggle room back.

    It takes time and no one is perfect (food is still a really hard category for me not to WAM) but stick with YNAB and it is amazing how much you start to see things differently.

    Like 5
  • Lumion said:
    WHEN should I start focusing on paying down my debt? Now or later?

    You are asking this question but your actions are different. Buying an Apple watch on credit is not a smart move. The answer to your original question is always "now." You are starting bad habits now that you'll have to fix later. Why not try to start with good habits from the beginning?

    Like 4
      • Lumion
      • Lumion
      • 6 mths ago
      • Reported - view

      Superbone 

      Good question, already ordered the watch and got a 50 usd discount on it. 12 month without interest so feels wierd to return it now. Or should I still return it to store? 

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 2
      • Reported - view

      Lumion Anything we say will be based on our values and priorities. This is your money and your debt.

      We can tell you the stove is hot all day long, but you're probably going to have to touch it once. I sincerely hope it's only a light sear.

      Like 2
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 6 mths ago
      • Reported - view

      Lumion You asked us questions and we gave you our best answers but only you can make that decision. What happens in a year? Will you have the cash saved up to pay it off without interest accruing? My guess is no.

      Like
  • Here is another way to say the same thing. You say you can afford the instalments. But 1 year is a long time. Can you still afford the instalments if you get sick? If something needs to be repaired in your home? If your car needs some repair (if you have a car)? etc.

    If you buy the watch now and pay instalments, you need to give that money every month no matter what. If you save these instalments in your budget with the aim to pay for the watch when the money is saved, you can reprioritize depending on your needs for each month. Or maybe a friend will come up with a great holiday idea and you'll prefer to spend your money on that rather than the watch.

    Plans and wants can change and not just because of emergencies. That's why it is better to save the money and stay in charge of it than to take on debt and have no choice but to use that money for that initial purpose.

    Like 7
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