Wednesday, February 12, 2014

Live now, pay later...

A few days ago, I met with a friend who started his own business back in July of 2013. I asked, of course, how his business was doing. "Well, I can barely pay the bills", he answered. "I only hope that people would pay me for my services."

It turns out that my friend is rather naive at the promises of customers that they will pay him in the near future. So he proceeds to complete the work (with a small deposit) only to be met with excuses by customers when the payday approaches.

Could it be that people are purposely refusing to pay for services that they received or do they live by the motto "live now, pay later"? Has it ever happened to you? You know that in a couple of months time you will have to pay a huge bill and despite of that you do not save the necessary amount. Perhaps you had an unexpected expense. Perhaps you are just not earning enough.

Yet it always surprises me the optimism that some people have for the future. Indeed I could describe some consumers as being overoptimistic in monetary terms. "People believe that something will happen in the future, perhaps that they will win the lottery or something", my friend argued. They overestimate their chances of being well off in the future. As such they tend to spend more today, sometimes burdening their credit cards or getting into debt.

Perhaps the old saying should be switched to "Pay now, live for later". Remember, your debt never goes away. It only becomes larger.

Have a great day!


  1. TKM606
    I think that people do live by the motto “live now, pay later’. Most people have more than one type of credit card. Gone are the days when people obtained credit to pay off big purchases such as houses and cars. In today’s world, people use their credit cards to pay for things like coffee and donuts. Credit cards enable people to live beyond their means, they make it too easy to overspend. Most people with credit cards tend to spend more than they earn. This can prove to be disastrous in the future.
    One failsafe way to prevent overspending when using a credit card, is to keep track of the purchases you make and always pay more than minimum payments required.
    I think your friend should refrain from granting credit to his customers till his business is fully established and financially stable. Or he could try put a cap on how much credit he grants e.g. 25% of all total sales could be credit sales. Credit sales are integral part of business so one cannot really afford to alienate them. One must therefore strike a balance.
    I think that customers should also realise that businesses need cash to function, especially small business. Customers should thus pay off their debts as soon as they can and not delay payment unnecessarily.