At AskMetafilter last week, a user asked a question I’ve been thinking about a lot lately. Now that I have my finances firmly under control, now that I’m building wealth, is it ever okay to finance fun? Here’s the question (with minor edits for clarification):

When is it okay to finance Toys? We have a budget, all bills are paid, we are saving $100 every month, the only debt we have is our cars and house. No credit cards. Each month we have about $900 left over. Between the both of us, we have a wishlist including:

  • a four-wheeler
  • a vacation
  • cosmetic home improvements

Facts and opinions welcome. Should we save ’til we can pay cash? Or is it okay to finance some or all of our wishlist?

I believe that in general, it’s not a good idea to finance Toys. I’m not saying that you shouldn’t buy Toys (as long as you have a balanced financial life), but that buying Toys on credit is almost always a poor financial decision.

The AskMetafilter user who posed this question still has $18,000 in car loans and is only saving $100 per month. I’d strongly advise against financing fun in a situation like this. But what about in my case? I’ve paid off my consumer debt. I have ample emergency savings. I’m maxing out my retirement plans. I’m financially secure. Should I buy Toys on credit?

To be honest, this option rarely tempts me anymore. You could probably persuade me taking out a no-interest loan is worthwhile if I have my money in a certificate of deposit earning 3%, but that’s about the only circumstance I can think of where it makes sense to finance Toys.

To me, this question implies a lack of patience. I’ve been there. I used to “need” shiny new Toys today. Over the past few years, I’ve developed discipline. Now I use purpose-driven saving to pursue my goals. I use multiple accounts at ING Direct to save for different Toys: new furniture (almost there!), my Mini Cooper, next year’s trip to France, etc. Yes, I want this stuff now, but I’ve learned to wait.

It would have been nice, for example, to buy new furniture in March when the work on our living room was finished. I could have put that expense on my credit card — or obtained store financing — and we could have used the room to entertain this summer. Instead it’s stood empty. In fact, I had a party last weekend for which it would be nice to have the extra seating. At one point, six of us were standing around the empty room, listening to Johnny Cash and sipping Scotch. It was fun — but it would have been more fun if we’d had someplace to sit!

By waiting, however, I’ve been able to save money to pay cash for the furniture and we’ve picked up a 25% off coupon and we timed our purchase to coincide with a huge sale (50% off on one item we want!). If I had made a premature purchase in March, I would have paid more for the furniture — and I would have had to pay interest on the amount I financed. Patience pays.

Note: This is a room we never really furnished when we bought the house five years ago. It’s had some placeholder furniture (it once contained shelves with all my books), but nothing permanent. The fact that we purchased a house that’s too big for us is one of those lingering mistakes that is always there to remind me of my former spendthrift days.

By saving, you create a delay. During this delay, you often decide that you don’t want the Toy you once thought you wanted. Or you discover another, better Toy. Or you find a better price. Patience is a virtue, especially with your pocketbook.

But maybe I’m missing something. Maybe there are time that it makes sense to finance fun. What do you think? Does it ever make sense to purchase Toys on credit? Would you borrow $5,000 to make a trip to Europe knowing that it would take you years to repay the loan? Would you buy a boat on credit? Is the answer different for somebody $18,000 in debt versus the millionaire down the street?

When is it okay to finance fun — and when should a person practice patience?

[AskMetafilter: After all bills are paid when is it ok to finance "toys"?]

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