So, i've owned my house for almost a year and REALLY want new couches, I've looked and looked, and it looks to be anywhere from $1700-$2100 for the couch(es) that I want. My problem is I dont know what method of payment to use, they offer 1 year interest free (deffered) payment, or if I should just pay cash.

I don't have too much of an "emergency fund", about $3500 saved up, so using it to buy couches would deplete it, but i'm very good lately at contributing to it.

On the other hand, i have ZERO "bad" dept, and only 1 other deffered account for a TV i purchased that I pay way more then minimum on and will have it payed off in just a few months. I DESPISE having another bill to pay every month, so even though it's interest free, I dont want to worry about missing a payment, etc. This is one reason I don't want to use the interest free financing, but i know it might be better.

Please don't say "dont buy the couches", I'm going to, just trying to get some opinions on which method of payment..thanks!

You should definitely avoid using your emergency fund to buy couches; what if a real emergency comes up while your fund is depleted? On the other hand, it is always best to buy with cash. Assuming that the 1 year interest-free payment option really is a no-cost option, you should choose that, provided that you are able to pay off the balance within a year.

Personally, I would save up the money in a "couch fund" before making a purchase. Delayed gratification can make purchases so much sweeter.

You're intent on buying these couches. But, you despise having a new payment and you don't like the idea of depleting your emergency fund. Okay, if those are your choices, then which option do you dislike the least? I guess I'd pay the interest free route.

You don't want to hear, but I'll say it anyway: save up and buy them outright without having to do either. C'mon, this isn't a car repair or a plumbing leak, it's a couch.

Good luck,
Zulu

...

We need a new sectional/pair of couches to replace our old one. But this has more to do with the abuse they've taken over the past 10 years at the hands of three very young kids.

(Our oldest fingerpainted on them with the contents of her diaper.)

However, I refuse to buy anything new or used until the youngest is old enough to not treat them like a canvas. He's two now.

Totally agree with everyone else. Don't by the couches until you can pay cash WITHOUT touching your emergency fund.

I'm in a similar situation. I also have an itch to buy some luxuries. Specifically, a Playstation 3 once the Metal Gear Solid 4 bundle comes out ($500). But if I get a PS3, I need a better TV ($1300) since the one I have now is *only* 480p 27" CRT and looking at it for extended periods of time hurts my eyes. But if I get a better TV and a PS3 (Bluray player), I'll need a better couch ($400-500) since the queen futon we have now is incredibly uncomfortable to sit on for more than thirty minutes. It's way too deep so we sink into it, it doesn't breathe so we start sweating, and the cushion is flat. It's also very ugly.

What if I said, "Don't tell me not to buy these even though I don't have the money to buy them right now, I am wondering if I should use my safety net or if I should borrow money." I think it sounds absolutely ridiculous to ask if I should borrow money for these things. These are luxuries, not emergencies or necessities. These are luxurious, completely unnecessary purchases. I really want them, but I don't need them at all. It is even more ridiculous to ask if I should use my safety net to buy luxuries.

Neither options are acceptable to me, but if it were a retroactive decision and I had to choose which situation to be in after the fact, I would rather have a zero-interest debt than be without an emergency fund (which could potentially land me in some high-interest debt if an emergency came up).

Always be wary of "interest free" purchases on credit. My friend bought a big screen tv "interest free" and unfortunately one month when their kid was in the new born intensive care unit, they forgot to pay the bill. Turns out there was a clause that if they missed a single payment they had to pay an extremely high interest rate retroactively. When all was said and done they ended up paying waaayyyy too much for the television...

I'm going to agree with everyone else.. this doesn't sound like a smart purchase - Start a "couch fund" and save up.

I've heard other horror stories about those interest free credit deals from stores. I can't remember the specifics, but I've read that Best Buy has given people fits over having mysterious charges show up on their cards and it being a royal pain to get them removed.

My wife has worked a number of jobs in retail, and the store credit cards are where a lot of places make their money. Sears used to have mandatory monthly meetings for all employees just to go over getting more credit applications. Nothing else was discussed. It was all about credit apps. I think the sales associates received a $2 commission for each credit app they processed. And the people who weren't retained got the boot because they were the worst at getting credit apps. Their rapport with the customers didn't matter. They were judged by how many credit apps they processed.

I just opened up a few new credit cards to transfer balances to lower rates. But I did so from the comfort of my own home when I had the time to sit down and read the entire customer service agreement before signing up (and I read all of them -- God were they boring!). There's no way you can do that in a store when you're about ready to purchase something and leave.

I don't care much for credit cards, but I think there is probably an eigth circle of hell reserved for store credit.

don't see any reason not to use 0%, but only if you have sufficient excess income to pay off the balance within the time period of the promo. if not, then i wouldn't do it. you really have three choices:
1. use your emergency fund to buy and then replenish
2. buy using 0% promo and pay off, keeping your emergency fund
3. delay purchase until you have the cash in hand, and keep the emergency fund

i wouldn't deplete the emergency fund to make a purchase, because the purchase isn't an emergency. that leaves you with either saving until you have the cash, or using the 0% promo. if you don't want the hassle of worrying about the payment, then that leaves you with waiting until you have the cash in hand.

I agree with this post. I think the most optimal solution would be to save up for the couches then buy on the 0%, earn some interest income, then pay it off before the 0% ends. That said, whatever you do, do not miss a payment or pay it off late. Someone else said this, but store cards do often have those nasty retroactive interest charges.

Thanks all for your advice, I think I will save up to purchase the couch. I know about the alternatives, craigslist and freecycle, etc. But I've got my mind made, I don't purchase anything for myself too often, so this isn't bad.

marsman, you bring up an interesting Idea, it sounds good - but like i said in my post, i really despise monthly payments, that is definately a more financially smart option, but having that overhead every month of having to remember to pay the bill, i don't really want that - If i did the 0% interest i'd pay it off as soon as possible, within 6 months preferrably.

I've got a lot of thinking and learning to do, I'm finally in a position where I'm saving a good chunk of my income, I'd like to keep it that way, we'll see how it goes.

You have to be CAREFUL with this, but here is what I would do:

Get the 0% interest for 12 months.
At the end of 12 months pay it off with a credit card.
Pay off credit card IN FULL when the statement is due.

Pros:
You get 13 months where YOU collect the interest on the money.
Say on a $2000 purchase at %4 that is over $80 for free.

Plus you get points on your card, for a 1% cash back card that is $20
Or Total, over a $100 for floating it.

Cons:
If you get caught and don't (or can't!) pay off in time you will get hit with massive interest fees.

Dang it.

Just look at the sofas for sale on http://www.craigslist.org. Notice the 200$ - 500$ price tags.

I assume you are female because you want to nest in your new house, so let me try this angle... think of all the paint you could buy! There is a wide world of window treatments, patio furniture, rugs, accent lighting, and throw pillows out there that you could get with that money, in lieu of your donation - er - purchase.

think of all the things people do on couches. OP wants to buy a new couch and doesn't want to buy a used couch. frankly, i wouldn't want to buy a used couch either unless some old granny owned it and covered it up with vinyl the entire time (my granny did this), because I know what I did on the couches that I sold to people...well, maybe more what my dog did.