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Cash, Credit, Finance your jewelry?

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Diamond_Hawk

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I follow a great blog about debt and money management and there are two schools of thoughts on investments: Do you use debt to leverage yourself into a position to increase cash flow OR do you eliminate debt as much as possible to operate solely on cash flow, minimizing risk in things like real estate?

That is not particularly applicable to the jewelry world as investment grade gems are not something I spend a lot of time thinking about - but the concept of debt for a jewelry purchase got me thinking: B2C recently began offering 0 percent financing options and I know several other companies offer financing for jewelry at differing levels of percentage rate, length and maximums/minimums.

For people who buy jewelry without the cash on hand for the purchase, is the perception that using a credit card is a better way to go, or is financing through a company (or 3rd party) more likely to encourage a purchase (especially if you have found 'the one')?

What creates the preferences and can you elaborate as to why you prefer one of the other (I assume EVERYONE would prefer to use cash upfront - but maybe not if there is a 0% interest option and you can leverage that money elsewhere as you pay off the large jewelry purchase?). What other considerations are there for financing vs. paying outright?:think:
 

missy

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I believe in minimizing debt including the mortgage so yeah I am a financial planner's nightmare :lol:

I paid off my first (30 year) mortgage (when I was single and in my twenties) in 3 years against my financial planners advice.
My dh and I paid off our second (30 year) mortgage (for both homes) in less than 6 years.

We only have a couple of years left on our final mortgage though we might pay it off sooner depending.

And as you might be able to guess from the above we don't buy anything including jewelry on finance instead we pay for it outright and if we can't we don't buy it. Including cars.

It might not make the best financial sense (when 0% financing is offered for example or for tax deductions in the case of the mortgage) but it gives me peace of mind and that is IMO priceless.
 

diamondseeker2006

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We are also in the debt-free for everything other than a mortgage camp, but I absolutely am fine with a young couple taking advantage of low or zero interest financing maybe for a year in order to get an engagement ring.

My daughter will soon be getting engaged (both are 23), and he has only been out of college for a year and a half. He fortunately has a family ring, but I would have no problem with him financing for a year within his budget as he has not had time to save for the full price of a ring. My husband actually did that as we got engaged during his senior year (parent loan paid off his first year of work). Since then, we had one car loan when we first got married and have paid cash for every car since then, and a mortgage is the only debt we have ever had otherwise. Our current (and final) mortgage is small and the interest rate is only 3.5%, so that's the reason we haven't been concerned about paying it off early.
 

Arcadian

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I financed only one piece of jewlery and paid it off in 6 months. At the time, paypal credit allowed this with no interest and no payments...nice! yes I totally took advantage and paid on the 5th month of my 6 months! also, at the time, it was considered a hidden tradeline.

But yes I've played the game before many times. I'm careful what I finance, and how I finance it. I work to get the lowest possible interest rates I can (all the way to zero!) I have more than one occassion gotten Discover to give me additional zero % for 12 months, and pay it off at the 10th and 11th month:mrgreen2:


IMO its about how you game the system and how you make it work for you. I use credit as a means to an end and I'm not faithful to any one bank. When that tool stops working for me, I go find another one that does. Thusly, I have 850, 825, 817 (yeah odd number) credit scores.

I don't however, buy more than I can afford to pay in cash... thats the trap many fall into.
 

baby monster

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I believe the prevailing wisdom on PS is to buy what you can afford at a vendor with a good upgrade policy. Trade-in and upgrade when you have cash on hand for the next step up in ctw. Perhaps, this question is better posted in Rocky Talky as more first timers read it.

I've never financed jewelry and don't expect to do so in the future. I leased a car for short-term once because it was needed quickly after my old one was totaled but I couldn't decide on which one to buy. The fees were just ridiculous so I would be weary of these zero % vendor loans because of fees.
 

lyra

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I'm old, so financing jewelry is a bad option for me.:eek2: I don't like the fact that we still have a mortgage. I hate the fact that we have a small car payment after many years of having none at all. On the other hand, we are in the phase of life where we are avidly making bucket list purchases. Things that might last decades or at least over 10 years. This is the last of the "spending" for us pretty much. :saint:
 

tkyasx78

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First ring was purchased with cash ( literally paid in cash ) ... subsuquent purchases have all been put on a credit card and paid off immediately so we can get the % back in cash or rewards . I never advise putting any jewelry purchase where you have to pay it off over time though. Jewelry is a want not a need and going into debt for it is not a great plan IMO.
 

pearlsngems

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I've never financed jewelry, never would. If the money isn't there to buy it outright, we don't buy it. We do use a credit card, but it is paid in full monthly.
 

MissGotRocks

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Financing with 0% interest would be the only way I would have ever considered financing jewelry if I were a young person. Using someone else's money for a year actually isn't a bad idea - provided you can make the payments on time and not incur the huge wallop of interest that is probably tacked on after a year.

I personally have no debt - mortgage or otherwise - so I don't have to consider this as a plus when it comes to purchasing. However, many young folks are not flush with huge bank accounts and I would definitely see that as a way to get a ring. Most probably have some money set aside so if they put that much down, their twelve monthly payments would be even lower than if they had financed the whole amount. I think an engagement ring would be the only jewelry I would consider buying this way though - everything else in terms of jewelry isn't necessary to have at the moment and could wait for saving. I think people extend themselves too far with credit and while I understand the concept of increasing your buying power through credit, it just is not wise. Job losses, accidents and illness can create a nightmare if you are stretched too thin and without income.
 

YadaYadaYada

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Well I'm going to be the odd one out here because I do have debt from jewelry purchases. There was one year that went badly and I coped by shopping and bought some nice things to try to alleviate how badly I felt.

Still paying for it but there could have been worse things I turned to in retrospect.
 

eapj

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I think the 0% financing deals can be enticing. I haven’t purchased jewelry that way but if I were making a large jewelry purchase, I could see that being a viable option. Especially for something like an engagement ring. Were I in the market, I may look more closely at a vendor that had 0% financing if that made me able to get my into my dream ring and I could pay it off for sure during the promotional period. Thankfully, I’m not in the market!
 

Bron357

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:eh:In my working life I was a financial planner (well, actually an auditor of the investment plans written for people) and I have a very strong view on debt.
Debt for capital growth, preferably with an income stream to help with loan repayment obligations can be an effective way of increasing wealth.
Borrowing money to buy things like a car (unless tax deductible/ for your employment), holidays, weddings AND jewellery is a NO NO in my professional world.
Home renovations where they add value to your home are also ok.
Jewellery is unlikely to be an investment. Firstly it has no cash flow and secondly you are many times more likely to “lose money” in real terms than turn a profit in 10 years time. That’s because normally when you buy jewellery there are fees, taxes and shop profit margin in your item. And some items are always worth more “brand new” ie the diamond engagement ring than “used or secondhand”. You might get lucky and nab a bargain by buying pre loved in the first place or tastes might change and your ring/ bracelet etc is worth more now than before but that’s the exception not the rule.
However I do believe in “credit” to take advantage of a sale item IF the discount is worth more than the cost of the interest. Buying your ring during the 50% off sale if you were intending to buy in 3 months time is worth it. Borrowing $10,000 over 2 years to buy an engagement ring isn’t. You will end up paying $13,000 for a ring now worth $5,000 or less to sell.
Saving up for things helps you appreciate their value. Signing on a dotted line for a loan, going off on a 2 week holiday only to come back to 2 years of debt repayments is depressing.
 

marcy

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I used to finance jewelry with store credit where they did 12 months same as cash. Now if I can't pay for it now; I don't buy it.
 

Phoenix

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Years ago, like years, I bought a Rolex on 36 month instalments, putting down my very first pay check as a deposit. I've never bought anything on credit since then.

We only have the mortgage on the house and that's the only debt, every CC bill is paid in full at the end of each month.

For investments in stocks and the likes, I only use cash that I have. I never borrow, though astute investors can trade on say, margin. I am too chicken!:lol:
 

Queenie60

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If I can't pay for it then I can't have it! My husband and I are old school as everything is debt free. We pay credit cards off in full on a monthly basis, we don't have a mortgage as our home is paid for. My bling is a luxury that we can afford.
 

Dancing Fire

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If I can't pay for it then I can't have it! My husband and I are old school as everything is debt free. We pay credit cards off in full on a monthly basis, we don't have a mortgage as our home is paid for. My bling is a luxury that we can afford.
Nahhh, We are just old, period. :lol: We pay off our mortgage 15 yrs ago and have had been debt free ever since.
 

Austina

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We haven’t had a mortgage for 20 years, and prior to that, mortgages on previous properties were paid off before we moved up.

We don’t buy anything we can’t afford, if something we want to buy is offered on interest free credit, then we’ll do it, otherwise we pay for it outright. We don’t run any debt, our C.C. bill is paid off by direct debit each month.

My husband is/was an accountant so would NEVER get in to debt to buy something so frivolous as jewellery or a new car.

He even has spreadsheets of our future predicated expenses until he’s 91! :lol:
 

bmfang

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Jewellery purchases for us tend to be paid with cash if with an overseas vendor. Locally here in Australia, even if we can afford it in cash, we plonk it on credit card to rack up rewards points and then pay the balance off in full at the end of the interest free period.

Having said that, the missus and I are both in mid-30s with a little one now, so jewellery purchases are few and far between now. Doesn’t stop me from window shopping though.

We’re generally big on paying cash for everything or if using credit cards, repaying the balance in full at the end of each month. Only debt we have is our home mortgage (and thankfully we have enough spare cash in offset accounts to drastically minimise the interest payments on the mortgage which is helping us kill principal down every month) and finance on one car (which we got at a good interest rate and is over a 4 year term).

My wife is a financial planner for a living so I guess I lucked out in that department, though in the past when I was a bachelor I was a spendthrift for a few years which screwed up my finances for a bit. If not for my parents insisting that I put away some of my own cash in managed funds for a rainy day. That is what saved me.

Now I’m a little older, still have plenty of wants but I’m a lot better at controlling those urges and redirecting them to treating my wife and son to gifts (at opportune times and within budget). Happy wife and son, happy life is my motto now.
 

vintageloves

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I have no problem financing to free up cash flow, if it makes sense at the time. We financed a car early in our marriage because we wanted to move soon thereafter and needed to save for a down payment and the loan rate was 1.7%. But for jewelry, I have not purchased nor do I intend to purchase an item so expensive I would need to free up cash flow by financing it.
 

AV_

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Windfalls.

Holding enjoyable, terrifically illiquid assets of perfectly muddled value feels so very good - & makes no sense... or too much to think about.
 
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Diamond_Hawk

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We are also in the debt-free for everything other than a mortgage camp, but I absolutely am fine with a young couple taking advantage of low or zero interest financing maybe for a year in order to get an engagement ring.

My daughter will soon be getting engaged (both are 23), and he has only been out of college for a year and a half. He fortunately has a family ring, but I would have no problem with him financing for a year within his budget as he has not had time to save for the full price of a ring. My husband actually did that as we got engaged during his senior year (parent loan paid off his first year of work). Since then, we had one car loan when we first got married and have paid cash for every car since then, and a mortgage is the only debt we have ever had otherwise. Our current (and final) mortgage is small and the interest rate is only 3.5%, so that's the reason we haven't been concerned about paying it off early.

Nice - a story of practical decision making with a touch of romance thrown in!
 

lilmosun

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While we have no debt and pay of our credit cards in full etc.., I have purchased gems/jewelry using 0% payments...but nothing that really requires financing and never more than 2-3 months. My jewelry isn't expensive by PS standards and and I don't like spending a lot at one time. It's not because of a cash flow problem but because I prefer to spread my jewelry spend so it comes out of my regular checking account and not savings. A lot of my regular jewelers know it and will just offer knowing I am good for it.
 
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Bayek

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CASH. If I can't afford a piece of beautiful jewlery then I don't want to go down the road of borrowing for it. I have financed a car and we did that because we didn't want to sell stock, but I never buy anything that I don't think I can pay off in a few years (house) or have the money in the bank to pay off if I want to, for me, it's bad business to borrow because I could easily become a buying idiot and in hock, no thanks!
 

Dancing Fire

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CASH. If I can't afford a piece of beautiful jewlery then I don't want to go down the road of borrowing for it. I have financed a car and we did that because we didn't want to sell stock, but I never buy anything that I don't think I can pay off in a few years (house) or have the money in the bank to pay off if I want to, for me, it's bad business to borrow because I could easily become a buying idiot and in hock, no thanks!
A conservative way of thinking. :bigsmile:
 

anne_h

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I use a credit card to collect the points, but then pay it off.

Like others, I don't see jewelry as a financial investment. But I *do* think there is another kind of value - the enjoyment value.

I typically don't buy something unless I have the cash on hand. That said, I've learned the hard way that special pieces don't come around that often, so if I saw something I loved, I'd buy it and then sell other pieces I liked less to fund it.

For financial investments, I'm all about dollar cost averaging in low-fee index funds. I've also done a leverage loan with good results, but don't feel a need to do that again.

Anne
 

Bayek

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I have always been a cheapskate! I was born that way, I just don't see everything in black and white like you do.


A conservative way of thinking. :bigsmile:
 
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