Fingerhut = Bad Financial Decisions

 I recently saw an advertisement on TV for Fingerhut, and how you now can get ALL the gifts you want at a low price.  This intrigued me considering I love a good deal. However, what I found was another Rent to Own Money Sucking Deal. All of these Payment Based Shopping Sites are terrible financial decisions.  They lure you in with promises of savings and deals, but in the end you are stuck in a wormhole of debt.

Why Fingerhut is a bad idea:

1. Items listed on Fingerhut are brand name goods,  From Household items to high End Electronics. However, the pricing is highly inflated. I took a sample of 20 items I considered key Christmas gifts and compared FingerHut pricing to Amazon.  On average, Fingerhut items are 14% more expensive than Amazon. (Shipping and Handling not accounted for)

2. Fingerhut is just another Credit Agency that happens to sell goods. Their "low payment" options are backed by high interest rates around 25%.  

For Example: A Keurig Coffee Brewer is listed at $140.00 with 15 payments.  Using Finderhut payment plan this coffee maker will minimally cost you $157.34.  (Whereas buying at Target it is $109.00). 

3. Shipping Costs may be rolled into Final Finance Price, which means you will be paying Finance Charges on shipping. Fingerhut has a tiny link at the bottom of the page that shows the true cost of ownership based on product prices.  After a 5 min search I was able to find that the $139.99 Keurig would eventually cost between $157 - $300.00!!! (see Table below)

4. Fingerhut likes to pride itself that it can help build Credit with the Fresh Start Program. First off, if you have a terrible credit score, its most likely because you were not able to repay loans..so why are you continuing to borrow money??  You should never  try to get a better credit score by increasing your debt. Payoff what current debt you have, and continue to pay all other bills (cell, electric, etc ) on time.

Example of how Buying a Keurig via Fingerhut can hurt financially.

Debt Payment Schedule: Debt Snowball

Do you have multiple debts you want to pay-off, and pay-off quickly? There is no better way to get rid of debt than by using the debt snowball method. I originally heard of the debt snowball from the Dave Ramsey show and have found it quite useful in getting debt under control.

The jist of the snowball is quite simple.

1. Write out the list of current debts and payments.
2. Focus on one of the accounts ( usually the lowest balance or highest rate) and add additional amounts to pay off that loan

3. Continue to pay the minimum payment on the others debt

4. As soon as the first loan is at 0, roll what you were paying on that debt into the next loan

5. Continue to roll your payments as each loan is paid-off

It's important to have a Debt Payment Schedule to track payments and timelines. A comprehensive  schedule is available on this site for downloading.  A training video on using the Debt Payment Schedule is available on the Simple Saving Habits YouTube channel.

Simple Savings Habits YouTube Channel

Quick Summary on how to use the Debt Payment Schedule

1. List out all of your current debts

2. Determine how much each month you can contribute as an additional Payment, aka Snowball

3. Rank debt by importance of being paid off

4. 
   Optional: Breakout the Snowball amount among the debts to compare between payment methods

5. Using the Snowball Schedule Tab, toggle between the two options to see which is best for you.
1. You can continue to play around with the rank and new payment to create the best option for your payment plan

6. Once you found the best approach for debt repayment - Print off the Snowball Schedule  to keep you on track
1. If you are able to make additional payments during the repayment time period, note those extra  payments in the schedule. This will help decrease interest paid on loans, and decrease time it takes to pay off the loan(s).
1. 

Using an Amortization Table

An amortization schedule is a table detailing each periodic payment of an interest bearing loan. It is useful for knowing the true cost of a Loan, the breakout of a monthly payment for principle and interest, and changes in the loan due to additional payments against the principle.

Having an amortization schedule set up for a large loan like a mortgage can help a person make a plan to pay off the loan sooner and thus saving hundreds, or even thousands of dollars.

The downloadable amortization loan schedule for Simple Saving Habits is easy to use. You can use this schedule to analyze a current or future loan. For a current loan, you will need to know the Total Loan value as of today, your minimum monthly payment, and the Interest rate on the Loan. (APR)

A training video is also available on the Simple Saving Habits youtube channel that shows how to use the Amortization Schedule.

https://www.youtube.com/channel/simplesavinghabits

1. Create the schedule by filling out the required Loan fields (Today's Date, Current Loan, APR, and Monthly Payment)
1. If you do not have a current loan, use the box on the right side to estimate a monthly payment based on an expected APR and loan.

2. Loan Summary gives an overall snapshot of the Loan.  The Total Loan represents the Total Cost of the Loan. (borrowed amount + accrued interest). When you pay more than the minimum payment, that money will go against the principle of the loan and reduce the total interest and time  it takes to pay-off the loan.

3. The Loan Schedule shows every payment made until the Loan reaches 0. Important fields to note in the schedule are:
1. Principle and Interest - Each payment is broken down into a value that goes against the principle of the loan, and for interest incurred.  The Principle will always start off lower with the first payment, and increase over time.

1. Cumulative Payments - The shows how much you have paid for the loan at any given period of time.

2. Total Loan Cost - This shows how much the loan has cost at any period in time. It is calculated as total Payments + Remaining Balance of Loan

Ways to Save Money and Pay-off Loans ahead of Schedule

1. Increase the Monthly Payment - Determine an amount that can be paid as extra every month with the minimum payment. Adding $100 dollars each month, can save $33,000 worth of interest, and pay off a mortgage 5 years earlier.

2. Add occasional Payments that vary throughout the life of the loan - If you are unable to commit to a monthly payment increase, use the Extra Payment Column on the Schedule Table to make payments against the loan.  These could represent payments made due to Tax Return refunds once a year.