Find Out What Type Of Black Friday Shopper You Really Are

There are three types of Black Friday shoppers:

  1. Those with a plan
  2. Those without a plan, and
  3. Those who plan to stay away from the shops altogether

Let’s start with John, whom we’re sad to say, is one of those without a plan…

Here’s what Black Friday looks when you’re the man ‘without a plan’:

John’s first mistake is that he’s only just found out that Black Friday is this week. His plan is simple – grab a trolley, grab a pamphlet, and grab as much as you can, while you can. If a ‘nice’ electronic appliance or two comes his way, there’s always the ‘budget’ facility on his credit card. John starts queuing early at seven in the morning. Right off the bat he’s number 823 in the queue. Note to self…next year he’ll have to wake up a lot earlier than five in the morning, that’s for sure. Thirty minutes after the store opens, John finally manages to wrestle his way inside. Long story short…John fills his trolley to the brim and then some more. Truth be told, John filled two trolleys, but who’s counting anyway? Here’s what’s running through John’s mind…Can you believe I only paid R4 152 for a trolley of groceries which normally costs me double that? So what if I bought some stuff I normally wouldn’t buy, it’s so heavily discounted I can’t walk away from the opportunity. But hang on a moment John, didn’t you buy a ‘nice’ electronic appliance or two? You won’t believe it. I’ve been looking for a new washing machine for ages. They had a sweet deal where if I took the washing machine, they’d throw the tumble drier in as well – two for the price of one. And what’s in the box?  Ah man, I needed a new laptop. I managed to pick up an i7 with one terabyte hard drive for just over R6 000. Incredible deal, right?

All in all, John spent R15 000 on his credit card. So, how much will this cost him in the end?

  • Well, nothing if he pays off the amount owed on his credit card within 57 days, but for John, this isn’t an option.
  • Next, John is paying 19% per annum interest for using the credit facility.
  • Assuming John has to make a minimum repayment of 1% of the amount loaned, this means John has to repay at least R150 per month
  • John wants to get rid of the debt in 12 months flat, so he intends on making repayments of at least R1 380 per month
  • If John keeps his end of the bargain, his bank will still earn R1 591 interest from the deal

Let’s look at the calculations below:

Credit Card Balance: R15 000
Annual Interest Rate: 19,00%
Minimum Payment %: 1,00%
Minimum Monthly Payment: R150
Actual Monthly Repayment: R1 380
Payments Required: 12
Total Amount Paid: R16 591,02
Total Interest Paid: R1 591,02

But between us, John can’t afford to pay the R1 380 per month repayment. In fact, truth be told, R500 a month is going to be a stretch for John.

Here’s how things look now:

Credit Card Balance: R15 000
Annual Interest Rate: 19,00%
Minimum Payment %: 1,00%
Minimum Monthly Payment: R150
Actual Monthly Payment: R500
Payments Required: 41 3,4 years
Total Amount Paid: R20 508,78
Total Interest Paid: R5 508,78

Can you see the problem?

Instead of paying off the credit card in 12 months, it’s taken John 3.4 years, and the bank’s made a whopping R5 508 in interest charges out of the deal. Basically, John paid full price for the tumble dryer he was bragging about earlier. And even worse, before those 3.4 years are up, John is likely to hit the credit card hard during next year’s Black Friday.

Here’s how Black Friday plays out when you’ve ‘got a plan’

Felicity really needs a new laptop. A middle of the range laptop will set her back at least R12 000. Last year she noticed that there were incredible deals available on laptops, and while she didn’t buy one then, she wasn’t going to miss out on this year’s Black Friday. Felicity knows that with her saved R12 000, she’ll pick up something which is normally sold for closer to R20 000. Now here’s the thing, Felicity had no special investment with a special interest rate. All she had was her little old savings account, but she was diligent enough to save R1 000 a month for an entire year to get a deal this Black Friday.

But what sort of saving is Felicity lining herself up for?

If Felicity is lucky on Black Friday she is probably going to pick up a laptop worth R20 000 for R12 000 (perhaps even less) Instead of saving R1,000 a month, she would need to have saved R1 598 a month to accumulate R20 000 in a year. You can see for yourself that Felicity is saving herself a huge amount of money by getting the product she really wants this Black Friday. What makes the deal even sweeter is that she isn’t going to charge the item to her credit card the way John did and will avoid interest charges.

So, how about the man whose plan is to stay as far away as he can?

He is probably making a very wise choice. Rather give the entire thing a miss if you don’t have the money to spend. Deals are going to be flying your way all day (and probably into the following week as well). If you haven’t saved for it, or you don’t have the spare money, lock yourself up in your house rather than maxing your already overdrawn credit card.

Until next time.

The Wise About Life Team

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