Can 0% Offers Be Good For Your Finances?

I bought a TV over the weekend. Finally!

I have been looking at and researching and pricing flat screen televisions for nearly three years now - since just before moving into my condo in 2006. I've been making do with a $50 one that I bought from a rent-a-center which was supposed to be very temporary.

I planned to buy one immediately after moving in, but instead opted for a nice bed, then a nice couch, then for new countertops, then for a vacation or two...you get the idea. There was always something that I wanted just a little bit more than a new TV.

I even called in as a participant in Suze Orman's Can I Afford It? segment and wrote about it back in October 2007! She said I couldn't at that time (though I left out some assets for simplicity's sake), but since then my monthly expenses have decreased, my short term savings have doubled, and the cost of the TV dropped in half! I semi-intended to call back and give her a "Can I Afford It Now" piece, but that didn't really fit in with my relatively impulsive desire to go ahead and buy the TV this past weekend.

I also got to skip a mortgage payment in February after refinancing in January (which I saved) so I further rationalized that I can put that $734 towards this "home" expenditure. From my perspective a good TV is as much a home expense (like furniture and other aesthetics) as an entertainment expense.

ANYWAY, the point is that after selecting my TV and a Blue Ray DVD player and the appropriate cables required, I decided to take up the retailer on their 18 month 0% financing offer. No interest will accrue or be owed as long as I make monthly payments on time (see my last post on my decision to engage in credit card arbitrage).

CONS

• I don't want another credit card, especially not one tied to a specific retailer. I already have 6, which is more than enough, and I hate to clutter my balance sheet with another one.


• Applying for credit will decrease my score, if slightly and temporarily.


• I don't want to have another monthly payment. I very much enjoy having very few required monthly expenses.

PROS

• I won't have to take that $1,500 out of savings, leaving me increased liquidity and earning a (very small) amount of interest.


• The small monthly payments required ($100 a month in order to have it paid off well before the 18 months is up) are easily swallowed up into my monthly budget - whereas if I took a chunk out of savings I am much less likely to increase my savings by $100 a month to replace it.

So I went for the offer. I can pay it off at any time if I want to, and I plan to do so with a windfall (bonuses, gifts, tax refund, etc) well before the 18 months is up. And then I suppose the increased credit extended to me will marginally increase my credit score.

By the way, my monthly cable costs won't increase at all and will actually decrease slightly! Time Warner doesn't charge extra for HD programming, and they let me trade my old cable/DVR box for an one that is HDMI compatible for free. The only extra cost was going to be an extra $10 a month for HD DVR, but when I pointed out that they were offering new customers a better deal than I had, they lowered my monthly rate and matched it!