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!