Klarna, Affirm, Afterpay: Why Buy Now, Pay Later Keeps You Paycheck to Paycheck | 621

0:00Instead, I'm relying on BNPLs for groceries. groceries. By the time you're done adding all these up, literally you're paying for this stuff more than it costs you to live in your home. If you don't have the money for something, that means you can't afford it. Mic drop, done talking. You can't not feed yourself and your family in order to pay a creditor, right? You know who is hurting? Your stomach. Your stomach is hurting for groceries, okay? And if you're in that situation, know that you can get out of it. There is a way out of this. Do you make good money but have nothing to show for it? Are you tired of living paycheck to paycheck?

0:34Do you have big dreams for your financial future? Do you want to get debt-free, but you don't want to live on beans and rice? Or you don't want to give up those pumpkin spice lattes? If you don't already know how to budget, or if you're using credit cards to get through the month. If you want to seem like you have your finances all together, or you're not on the same page with your spouse when it comes to finances. We know what you're doing probably isn't working, but guess what? You're in the right place. We're Shana and Vanessa. We're best friends, business partners, and master financial coaches trained by Dave Ramsey.

1:04We've been in business since 2019, helping hundreds of amazing people like you create budgets, get out of debt, stop living paycheck to paycheck, and know exactly what to do with their money. In this podcast, we'll share with you everything we know, plus everything we're working on with our clients so that you have the best chance at reaching your financial goals. We want to help you take the guesswork out of your budget, improve your marriages, and even bring your kids in on the conversation. We can help you no matter where you're at, whether you're the single mom who's never had$500 in her savings account or the millionaire who's paid off four real estate mortgages.

1:36And we're not going to shy away from the tough love. We'll tell you what you need to hear and encourage you at the same time. This is the Financial Coaching for Women podcast. I'm really excited to talk about this, Vanessa. I know you have been chomping at the bit to talk about this on the podcast. So here we go. It's exciting times. We're going to talk about some BNPLs. Then we did not know what that meant. We had to Google it, guys. We definitely had to Google it. I feel good about that. We're financial coaches. We know things. Which is so funny. Okay, can we just give the backstory? Yeah. We were sitting on the couch planning our podcast episodes, what we were going to do, and Vanessa's like, we have got to talk about Affirms.

2:15I want to talk about Affirms and Klarna. Yes, we just. I was with you on this. And then we go in our Facebook group, and we found out people are asking about BNPLs And so we're looking, we're like, okay, let's see if we can address this question. And we Googled it and it's buy now, pay later. Who knew? So you guys wanted to talk about it. We want to talk about it. Everybody in the club wants to talk about it. So it's exciting. So here we are. All right. So we have this post in our Facebook group. It says, hi, I'm new to this group. I recently joined because I'm hoping to get a handle on my finances and stop my paycheck being gone before it arrives to do this cycle of BNPL orders and the daily pay feature offered through my employer.

3:02That's terrible. I'm also 40. I should have savings and already own a home. Instead, I'm relying on BNPLs for groceries. That hurt our heart. Yeah. Okay. So many things. Yeah. Lots to unpack here. Yes. Lots to unpack. We're just going to get the elephant. We want going to talk about Klarna's affirms all of that but the other it's not an elephant but it is a big deal the daily pay featured is feature I know they think they're helping I know it sounds great but it's not good it's not a good system it's not great it's not awesome and we don't love it for you no and if your employer is offering this do not accept yeah hit say no thank you I appreciate the offer but no you guys this is going to get you in way more trouble and I know you think like Shayna said, they think they're helping.

3:50You think that it's going to help you. It's not going to help you. You need to be able to handle getting a paycheck and understanding how to manage that. Not, this is going to require you to be in your finances every single day and figure it out on a daily basis. That is not okay. So please do not accept any of those daily. I didn't even know that was a thing. I was like, what is that? And we Googled that as well. This is a thing that people are offering to get your paycheck daily versus weekly or bi-monthly or monthly or whatever. Yeah. So what we need to talk about is Vanessa and I have now, it's probably been what, three years, two years.

4:27I know Sizzle was the first one. We have started having to put Klarna's and AfterPays and Affirm and PayPal and Infor and all of these things into your budgets. And we've watched them creep up and up. And we don't love it. We hate it. We don't want it. We want you to stop doing it. Yeah, we hate it so much for you. So know that as much as you guys hate it, we hate that as well. Because some of these amounts, guys, they're more than your mortgage payments. So I've had multiple people that when you add up how much they're paying, all of them, because they use one and then they go to the next one and they go to the next one.

5:03So they don't just have in a firm, they have in a firm and a Klarna and an Afterpay and a Sizzle. Is that how you say it? Whatever. all of them. And so, and when, by the time you're done adding all these up, literally you're paying for this stuff more than it costs you to live in your home. Yeah. Okay. So that's not okay. No, it's so not okay. Let's back up. So this, these things are different than a credit card. So on a credit card, you swipe and then you have one payment and usually it's pretty low. That way they can get longer term interest over you, right? They want you to hang around for a long time.

5:34This different system is very different. What it does is you're going to go buy the cool thing. I don't even know what it is. A TV. And there is an option under there that looks really good. And it says, buy now, pay later. And so then you can, it says, if you pay four installments of$323, then you can have this TV today. And so then you have$323 in your budget for four payments. So instead of like a$40 payment, because you spent$2 ,000, you now have$323 every single month. Okay. And then what Vanessa is saying, then you're on the next thing. And you're like, Ooh, buy now, pay later. Love that for myself.

6:15And then this one's only going to be$80 a month or every two weeks or whatever the system that you set up is. And so these can actually start to stack. And there's such bulky payments that they really start to be a problem. They really do. And because they're all on different cycles, So some of them are three months, some of them are four months, some of them are 12 months, some of them are six months. Because they all vary, the amounts that drop off are not consistent. And like Shayna said, the amounts just start to stack up. And a lot of them get you on this zero interest or whatever the amount is.

6:46It doesn't matter. Guys, please get through to your heads that the whole thing about zero interest, that is not the point. Stop thinking that is a solution because we've had a lot of people with zero percent interest. It doesn't matter. You need that money in your monthly budget. So we'd rather you pay for it in full than do this. But because, like Shana said, there's so many of them in all these different pay cycles, you are paying an astronomical amount of money a month to 20 or 30 different items that you now just did pay now or buy now, pay laters, and apparently including groceries. No. Absolutely not.

7:21And so tough love, we love to give you tough love. We love to love you. We do love you. We love you. and you're our bestie. But I want you to know that if you don't have the money for something, that means you can't afford it. Mic drop, done talking. If you don't have$333 for the thing that you want to buy, that means you can't afford it. So it doesn't mean I go buy now, pay later and try to figure it out later. It means I can't afford it. So that's actually what that means. And you've got to start thinking in those terms. Now, actually, it doesn't really mean that, but I want you to be like hard stop on your life that way.

8:00What we want you to do is set aside ahead of time that$323 and then you can pay it for it in cash and then you can afford it. And a lot of times you guys, you can afford it. One thing here is you guys are, your budget's so unorganized, your money is so unorganized actually, that you don't know what you can afford. And then you just use that and you try to figure out later and it's messy. And it's so messy. It's so aggressive because how, I'm not going to tell you the truth, Vanessa, but I guess I am because we're having a confessional here. A couple times I put a firm on the budget and I didn't get details of that there was four firms that we needed to know.

8:35And I just felt personally attacked by every time we come on a new session, there'd be like a new firm or a new something that we didn't, because at first I didn't realize that you could have several. I thought it was adding to one balance and you were going to have one payment, but no, Oh, friends. Anyway, don't love that for you. And we don't want you to do that. We want you to be able to save the money and pay for it in cash, however long that takes you. Maybe it's only a month. Maybe it's not. But that's going to feel a lot better than having all of this money, zero interest, stealing your paychecks.

9:05It gets very aggressive, isn't it? It's time to enter your coaching era because making good money should feel like making good money. Yeah. Imagine six months of private coaching where we'll tell you exactly what to do. No guesswork, no confusion, and absolutely no judgment. It's a done-for-you system that actually works. You don't know what you don't know, and that's not your fault. And that's why we're here. Financial coaching with us looks like two coaching sessions a month, personalized recaps, and after-hour support, you can text and email. So you're never stuck wondering what to do next.

9:39Together, we're going to build your budget, set up your system, and tackle any challenges that come up along the way, which, by the way, they always do. If what you're doing isn't working and you're tired of trying to figure it out on your own, sign up for financial coaching at budgetbesties.com forward slash coaching before all of our spots fill up and we will help you go further faster. Six months from now, you'll wish you started today. So you're using other people's money to buy things for yourself. So you absolutely cannot afford it. It's not your money. So you're trying to borrow to be able to make this work.

10:12and you've gotten yourself in such a sticky situation that now we have to use it for everyday living. And that is, again, not something that we want for you. And if you're in that situation, know that you can get out of it. There is a way out of this. You do have to make some hard decisions, but there is light at the end of the tunnel, okay? Yeah, and so just set up this guardrail. So you know how we have the guardrail, like you never use the bills account for spending. That's your new normal. Your new normal is you just don't use them. Doesn't matter about the zero interest. You can do the same zero interest thing by saving up for five minutes, probably because you can afford, which we know you can afford it because you found a way to make these payments sometimes, right?

10:51Save the money and then pay for it in cash. Save the money, pay for it in the cash. That's your new MO. We don't use credit to buy things that we can't afford. And we don't use Klarna. We don't use Afterpay, Affirm, any of it. Yeah. Some people will say, oh, I got it because I knew I was getting a bonus or commission and I was just going to pay it off then. again we're trying to buy something that we can't afford in hopes that we get money in the future to be able to pay off the thing that is not what we want save it so when you pay cash using that bonus or commission that you got in that is going to feel so much better because that is your cash it's money in your pocket in your bank account that you can use to pay for these things yes okay so now what if you're in this unfortunate cycle where that you've she's put herself in and actually I have two clients right now that are in the same situation where, okay, if Klarna and a firm take my money, then I can't buy groceries.

11:41And so that's where she's at. I actually had a client, I had her create a new bills account. And it was literally called bills that I must pay. And it was all of her bills that like her mortgage and all that kind of stuff. And then her old bills account had all of these other things tied to it. And we got to decide when you can pay them, you can and we'll put some money over there and that'll be really nice for them but they like you have to be able to have groceries first I don't it doesn't matter if you pay a creditor they'll be fine what did you say Vanessa they're going to come and take your take their Peloton back or whatever maybe they will but I doubt it so that's okay you're not going to pay them until you get your budget caught up and you're able to pay for your needs and your basic things all by yourself with cash and then you can go back and pay them okay I'm going to act out what people are thinking but what about my credit score, Shana?

12:29That's going to take and oh my gosh, I have to be able to make these payments on this stuff. What would we say to that? I would say one, I don't even know if these affect them, but two, I don't care. How about that? Sorry. Oh, did I say that out loud? I'm so sorry. We're in a mood today. I need to go eat lunch or something. But here's the truth, guys. Yes, you got yourself in the situation. Yes, we want you to own it. We will never not have you pay on something that you backed up that's your responsibility. We get that, okay? However, when you can't afford groceries or gas, for your vehicle to get to work to make money for your family, something's got to give.

13:00And so you need to be assertive and you can call these companies and say, look, I'm telling you right now that I cannot make this payment. I'm telling you at a time, right? I'm being proactive and letting you know that this money is not going to be there. And I know I got myself in this. I'm going to get myself out, but I need a minute. I need a minute to breathe. And so you are going to, like Shana said, you're going to fund your grocery account before you fund the Klarna payment or the sizzle payment or the affirm payment, okay? Because those are things you absolutely have to have. And then when you have the work over, when you have the money, then you can pay them what you can afford to pay because that is really important.

13:37Yeah, you can't not feed yourself and your family in order to pay a creditor, right? That's not the thing. And the other thing, like Vanessa said, you're gonna pay them eventually. It's not, so you don't need to worry about it. They're not hurting for the money. They'll be okay. You know who is hurting? Your stomach. Your stomach is hurting for groceries, okay? But they're not, it's not like, your grandma that you're not paying back and she can't eat, right? This is a corporate company. They'll be fine. And it will allow you a minute to reset. And like Vanessa said, you can call them, give the courtesy, be a good, be a good person in that way.

14:07But then you also will be very firm and say, I will not be paying you. This is it. This is what, this is the truth because it's your money. And then you will eventually go back and try to catch up to everything, but you've got to let yourself get off of the cycle first. And at this point, guys, your credit score is your least priority. Okay. You're not worried about that. You're worried about paying for gas and groceries. You're worried about paying your mortgage payment and your utility bills and keeping water on electricity on. You have some hard decisions to make. And again, you can call them and talk to them and let them know the situation and let them know that I will pay you when I can, but you're don't worry about your credit score right now.

14:43And the other part to just close it out here, and we've had this happen with several clients is you eventually your credit score is actually going to go up. Because right now you have all of these things, you have credit cards, you're missing payments, you don't know this and that and the other, and your credit score is not great anyway. You're oversaturated with credit. It's not hitting up. Yeah, it's not going up anyway. So it might take a temporary hit, but then once you get caught up, you get reset and you're able to pay for your life and then you start paying stuff down and paying it off, it will go back up.

15:10It skyrocketed, literally. We've seen that so many times. And we tell people, look, it's not the byproduct. We don't focus on your credit score, but it is a byproduct of doing what we tell you to do. And it happens all the time. So don't worry about that now. That'll happen later. Yeah. And then the final thing, I think I already said this, but I just want to make sure that people know, I don't like them personally. I don't like those payments. They're like, they're like, their amounts are weird. The timing is weird. Sometimes that you set them up every three weeks or something stupid. There's such clutter in your budget.

15:41There's such clutter. Even if you have a Visa card, it's coming out once a month. Okay. It's great. I, at least I can do, I can physically deal with that. I don't like them, so I think you shouldn't do it. I think that's fair. It bothers me for clutter purposes. If you love the budget besties, you will not use the NPL. That's it. I think that's fair. That's what I'm hearing. It's budget clutter that we don't need in our lives, okay? It's just not good for you guys. They're not helping. It's not better. So just somehow, first of all, it's just using credit cards. Use them no more. So start there.

16:10Stop adding them to your budget, and then let's focus on what you do have, and we can get rid of it. Yeah. if you make good money but have nothing to show for it this quiz will help you figure out what's really going on with your money and what your next step should be you'll get a personalized result and a simple action step to help you feel more organized and less stressed go to budgetbesties.com forward slash quiz and take the free quiz today that's budgetbesties.com forward slash quiz to find out what's really going on with your money