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Buy Now, Pay (Pain) Later?



The past few years have seen the rapid growth of the “Buy Now, Pay Later” (BNPL) industry in Singapore. Essentially, BNPL offers consumers a chance to spread out the cost of their purchase over a series of interest-free instalments, usually spread out over 3 months to a year. The BNPL model of interest-free instalments appeals to some, as this is unlike a credit card, which usually charges you interest on your deferred payments, until the sum is paid in full. The BNPL model also appeals to consumers such as polytechnic / university students or lower-income workers who may not have the annual income to qualify for a credit card, as this gives them the ability to purchase a product or service despite not having the funds upfront, nor access to a credit card.


The catch, however, is that the providers of these BNPL services also have to make a living. One of the ways that they generate revenue is through late fees. For example, Atome, one of the larger BNPL providers in Singapore, will charge a late fee of SGD 15 for each missed payment. If one purchased a $100 pair of shoes on a 12-month BNPL plan, and missed 7 of the monthly payments, the late fees alone would add up to $105 – more than the original cost of the shoes.


If one makes all the scheduled payments, the BNPL model might just be an alternate way to access credit. But if one were to miss payments, or be tempted to spend beyond one’s means, then the “Buy Now, Pay Later” model can very quickly morph into a “Buy Now, PAIN Later” cycle of agony, especially if one’s income cannot cover a growing pile of debt.


Brethren and friends, I am not for or against the BNPL model. All I am asking you is to heed the Bible’s wise financial advice. Here are three points to consider:


#1 – STOP!

Before you make any purchase, whether using the BNPL model, or a credit card, or cold hard cash – STOP and think!


STOP and think if this purchase is a priority. “Prepare thy work without, and make it fit for thyself in the field; and afterwards build thine house.” (Proverbs 24:27 – KJV). The Proverbs writer was asking the reader to set his priorities right. In the primarily agricultural society of those days, one’s financial resources should primarily go towards ensuring the survival of his crops and animals, and not so much towards building a nice house for one’s self. Today, it might make sense to spend a few thousand dollars on a course to upgrade one’s skillset, but would it make sense to spend that same amount of money on a luxury bag?


#2 – SIT DOWN!

Regardless of whether you are a new employee getting his first paycheck, or a seasoned veteran in the financial industry – SIT DOWN!


SIT DOWN and make a budget. Jesus Himself said that if a man were to build a tower, he would first sit down and count the cost (i.e. make a budget), to see if he could finish it. If he did not do so but went ahead to begin construction, he would only face mockery when he could not complete it (Luke 14:28-30). Although Jesus’ point was about his followers needing to count the cost of discipleship, and being mindful that they needed to forsake everything for the cause of Christ (cf. Luke 14:33), we can draw a practical financial application which is that sitting down to make a budget is a necessary thing. After all, how can you determine if you’re overspending or going into debt, if you don’t even know how much money is coming in, and how much money is going out? How can you know where to trim your expenses, if you don’t even know where you are spending your money?


#3 – STORE UP!

Many of the older members would remember the dark years of the 1997 Asian Financial Crisis, when jobs were lost, houses were foreclosed on, and bankruptcies skyrocketed. For the younger generations, the Covid-19 pandemic gave us our first taste of economic fear and uncertainty. Whether you are young or old – STORE UP!


STORE UP and set aside funds for emergencies and tough times. A November 2022 report from the United States’ Federal Reserve found that the median savings balance of Americans under 35 was only $3,240, and the median savings balance for Americans 55-64 was $6,400. That is shocking and scary to think about, as that amount of savings would only last a few months in the event of a crisis like the loss of a job, or health emergency.


In Genesis 41, the Pharoah of Egypt had a dream where seven lean cows devoured seven fat ones, and where seven withered ears of grain devoured seven healthy ones. Joseph, by inspiration of God (cf. Genesis 41:16), interpreted the dream and said that Egypt would experience seven years of plenty, followed thereafter by seven years of famine, which would “consume the land” and cause the years of plenty to be forgotten (Genesis 41:28-31). Joseph’s wise advice was to store up 20% of the produce of the land during the seven years of plenty, and this “emergency store” would be used to feed the people during the seven years of famine (Genesis 41:34-36).


Some financial advisors will recommend the 50/30/20 rule – that 50% of our after-tax income should go to needs, 30% to wants, and 20% to savings. Well, this is not a recent idea, but the Bible records that Joseph, by inspiration of God, had already suggested this wise idea more than 3,000 years ago.


CONCLUSION

Brethren and friends, “Buy Now, Pay Later” schemes have the potential to escalate into “Buy Now, PAIN Later” if not managed wisely. On that same note, if we do not handle our finances wisely, we will be setting ourselves up for a world of suffering. Let us follow the wise financial advice in the Bible: STOP and think, SIT DOWN and make a budget, and STORE UP for an emergency.


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