Going Into Debt For Dolls - are the potential long-term consequences worth it?

What an excellent breakdown, this is such a good way of putting it. People need to at least know this before they make such a decision.

 

Thanks for the insight. ^_^ I have two more semesters of undergrad with next to no chance of losing my scholorship and I'm going to do two years of grad school for art therapy. If I start off in special education, I should be able to get loan forgiveness. I've only taken a government loan where the interest starts after I'm done (forget if that's subsidized or unsubsidized). Other than groceries and bills, I really don't buy things.

~Angelkitty

 

One thing to keep in mind, though, is that if the doll is a limited, as many of them are nowadays (hello Soom, hello Volks), you probably won't have a chance to buy it later for the selling price when you have the money in hand. You will have to pay probably more than 484 for it on the Marketplace later because the limiteds tend to increase in value after the sale period. It's possible you could find one at a bargain price if you were very patient and diligent, especially if it's a popular limited with no set number and you're willing to take one that's a little less than minty mint (like one that's missing some of its parts, has been modded, etc.), but if it's one of those "limited to 20 sets" type deals then the odds of your getting one later without having to pay through the nose decreases.

A couple of additional points:
- if you can afford to make more than the minimum payment every month then obviously you save quite a bit on interest;
- even if you must use credit, you can still use the doll store layaway plan and finance with credit card via Paypal, causing your total interest to be less because the full amount is not going on your card right up front, only over time.
- the dollar is also likely to fall in value over time making the extra amount you pay worth less than if you had to pay (cost of doll + extra amount) right up front, so you're not losing the full 84 dollars in value terms, just some smaller percentage of that.

I'm not saying that people should run out and charge dolls, especially if all they can realistically make is minimum payment, and especially if they're beginners with credit. However, once you get comfortable with credit and good at paying it off there are little tricks you can use and, while you still may pay more than if you had cash on the barrel up front, you can limit the amount that you actually "pay" extra.

 

Good post, Bunnydots.

IMHO, though, the falling value of the dollar isn't a stable enough factor that it should be relied upon in budgeting. For those who like to gamble, though, it's a fun consideration. Mind, I'm not denying it's a factor; but it's a very unpredictable one that can go up as well as down, making the ultimate usefulness of it in budgeting fairly worthless.

You are correct that paying more than the minimum amount each month, or using PayPal financing, will decrease the number of interest payments one has to make. However, the buyer will still end up having paid more for the doll than they would have if they had found another source of funding than debt spending. (I'm a big fan of selling other items to raise the cash quick!)

You are also correct that limiteds are only available for a short time, and tend to rise in price later on down the line. That's where deciding if it's worth the higher price to "have it now" comes in. But I think it's incorrect -- even dangerous -- to convince yourself (general you) that you're "saving money" buy purchasing the limited now on credit. You're not saving money. You're just overpaying by a smaller amount. Sometimes that amount is significant; often it's not.

All that said, I know that the example I gave was super-simplified. That was intentional; not to mislead but to break it down so it's easy to digest. I've found that when I list all the potential variations in a problem, I tend to lose the message fast amongst all the grit.

 

My credit card debt is from spending money on everything ELSE, and the dolls I bought with cash... which are preventing me from paying off my credit card.

I also have student loans, which make me sad, because even if I do get out of regular debt, I still have those to pay.

Just think, $1800 later I'll be okay to buy all the dolls I want. (and still pay all my important bills.)

That sounds nice.

 

I know you tried to give a simple example. I was just taking it to the next level for those of us who are there I could add a lot of points about the cost of one's time if one has a well-compensated job vs. the cost of just getting a purchase out of the way, or the need to maintain some liquidity in your funds (so you use credit sometimes), but that's probably beyond the level of the average doll purchaser. However, these points are relevant to the use of credit generally for many people.

The only point I would add is that over time, the dollar does tend to devalue quite consistently. You see short term fluctuations, and of course if you're thinking of value of dollar vs. foreign currency that is hard to predict. But just speaking in terms of rising prices, I think it's a safe bet that over the long term (like the "years" model you were using) prices of most items generally rise/ i.e. dollar is worth less. This is why movies that used to cost a nickel now cost ten bucks to get into, and candy bars that cost a dime when I was 10 now cost 85 cents. Even though we have had several cycles of recession and growth over those time periods, it's hard for me to think that most goods, aside from a few volatile items (like oil/ gasoline) will likely be cheaper in four years.

 

You know, you're right about the devaluing dollar issue. My brain had shifted to thinking about short-term budget plans rather than long-term, which was a major mistake since I was the one who set up the "many years" model we were talking about in the first place. Duh. I need more tea, clearly.

 

Except that isn't always the case. Home electronics are one of the few examples where the contrary holds true. Just compare the prices of TVs, DVD players, and computers with 10 years ago. I remember in 1992 being happy when I could get a CD for $12 new. I remember desperately wanting CD of the British Musical Metropolis and it was the incredible price of 40 pounds which I could not afford, and I recently picked it up for $25. ^^

Personally, I don't think using a credit cards needs to be bad, while for many people credit cards can be dangerous it does come in handy to have a credit score when one wants to make one of those major life purchases that we're all unlikely to have the full amount in cash for. (like cars or even more so houses, saving up for the amount of a doll is one thing, saving up to have the entire cost of a house is a bit more of a stretch for most of us.) I know just out of college I was so proud of my lack of credit card and debt until I got a 17% interest rate on my first car and had to pay an additional $2000 "security" payment because I had no credit history. ~.~

What does concern me is all the people who seem on the edge. Dolls/hobbies in general are great, but it makes me very uncomfortable when I see people posting sales where they need the money because they now: have no job, need to buy food, have huge amounts of debt they can't handle, had a medical emergency, etc. It sort of makes me wonder if this was really an appropriate choice of a hobby for them. Things do come up, but if you're that close to the edge is a hobby that consists of buying several hundred dollar dolls really the right one for you?

I know that sounds very harsh and I do feel bad for people who have this happen to them, but it also puts those viewing the thread in an awkward position and also opens you up to the criticism.

 

All of This.
"I know, like we haven't heard that excuse a billion times."
But for some of us, the market means everything.
Also you plan for one thing, and fate gives you something else. Well, life does happen. So it's when your on your knees that you learn some of the hardest lessons to manage your money. But every time you dig into it, you have to work just as hard to get out, true in every sense.

If you can justify the means and the end in your mind, then sometimes yes, going into debt could be worth it.
I'm not sure if personally I'd say it's worth it, because the aggravation from having the debt is pretty draining. I had to learn the hard way a couple years back and I must say it was an experience, avoiding debt is better than having to worry about it. Having 30% interest on a few thousand may not seem like a lot, but when you are unemployed or a student, is.

I totally understand the whole limited dolls deal, and that's the only time I ever put a doll/related limiteds on a CC. Though like many am extremely quick at paying that back.

 

Personally, I think you shouldn't give up on what you love because of financial trouble. I mean, of course, completely. Sometimes, desperate times call for desperate measures, and often, we don't expect to have the problems we do - we don't always know when a job will fall through or when a emergency will pop up. That doesn't mean the hobby isn't right for us. All worthwhile hobbies are ultimately expensive. However, when trouble does arise, we must make sacrifices and put purchases on the back burner until things stabilize, even though it's tough and no fun!
I digress, just addressing rkold's post in another light!
Lizzard, I tried to mention interest before, but didn't think to do an in-depth example. That was great! It really does shed light on things. You guys are making good points and this doesn't feel hostile in any way. It's good!

 

Without going too far OT, I did leave an exception for "volatile items." Technology-based items are extremely volatile because new developments or a shift in government standards makes their prices drop. Oil/ gas is volatile because there are substitutes for it and because of how the market works for that commodity. There are other things that fall in this category, I'm sure, but technology is something that consistently shifts in value for unforeseeable reasons. Obviously most purchases (a loaf of bread for example) don't fall in this category.

In spite of what appears to be big arguments in favor of debt on my part, I do agree with you that it seems like there are some people in the hobby who are prone to overextend themselves. I don't like how the companies push to get people who may not have a good source of income to make an expensive buying decision within a short time window, though I know the doll companies have to do everything they can to get business in this bad economy, too (and the rest of my ranting on that subject is in the Debate section where it belongs).

 

A bit OT, but I guess I see technology as less volatile than say gas/oil or gold and more just something that always tends to go down in price once something is deemed a necessity and less of a luxury, if that makes any sense?

I agree that I feel like this hobby and the companies do sort of push people into making what are not always wise choices. I personally feel like there is a lot pressure to own what is new and companies offer LEs with very limited ordering periods giving you no real chance to think or even to prepare. And to me, jumping back to topic, leads to people making choices they shouldn't always make and taking on debt they can't handle.

It just feels like there are a lot more people who can't handle debt well or at least want to share their stories when they're selling their dolls.

It is tough and no fun, but sometimes you just have to wait and not buy until things are more settled. When I first graduated college I had very little money and a horrible job and I knew I wanted to collect dolls, but I didn't jump right into anything because even though I love dolls I knew I couldn't afford it. Instead I worked hard to store up money in case of emergencies first. ^^; I had patience and waited and was able to love things from afar until I was able to buy things without having to worry I would need to sell something the moment something went wrong, because the problem is something is frequently likely to go wrong.

Even now, I try to be realistic about my hobbies and might love a doll (like Volks SD-16 Iris) but I'm able to love her from afar.

Again, I know this sounds very harsh, but I find it very disturbing to hear people taking on serious amounts of debt all for a hobby or then to sell dolls with a sob story. I think it is dangerous for students to take on huge amounts of debt for dolls when there are no guarantees there will be jobs for them.

And BTW no, not all worthwhile hobbies are expensive. ^^;; One of my first hobbies post college was collecting vintage post cards. Most cards went for $1-$3 at the time so it was a fun and relatively inexpensive hobby. I still treasure all my vintage postcards.

 

rkold,
You're right - I guess postcards may not be expensive. I just figure rare items or added money racks it up eventually, but the postcards sound cool! No offense was intended or anything. Lots of hobbies are expensive, though, in the end. ^_^ That's all I meant. "Worthwhile" wasn't any judgment word. It's something my family says - we know what we like is expensive, but worth it to us - it just doesn't come cheap, and we know pacing is everything.

And you're right, it is tough to see this stuff happen to people and the debt is dangerous. Surprise circumstances were what I was referring to - the pop-up problems we don't ever know are coming. But going into debt, then having to sell a doll after getting in too far after an emergency could be prevented with planning, and I agree with you there. It sounds like you had things well under control, with a good plan, and that's so admirable! I know how that loving from afar thing is - Soom kills me! lol

 

Great points about company pressure on buyers.

In life, people don't always get to have what they want. Businesses, credit card companies, and loan-makers certainly seem to be doing their best to convince people otherwise, though. Perhaps parents and schools aren't teaching the lesson, either. All I know is that the idea of saying NO to an item one wants seems to be becoming more and more foreign in society.

 

(my bold)
Just a word of warning: some student loan providers take into account how much money you have in the bank when deciding how much money to give you. While for some people that's not a big deal, I know someone who, because his common-law partner was working full time, did not even get enough in his student loan to cover his tuition, let alone his share of their living expenses (and his fiancee was not rich enough to pay the shortfall out of pocket). There are ways around this (my mother offered to hold on to my extra money for me, not that I ever had any), and it's possible that not every loan provider will begrudge you a small "down payment when I graduate" fund, but on the whole, it's like welfare: they figure, if you have enough to be putting some away, they're giving you too much.

While I certainly support and encourage people who choose not to saddle themselves with debt, another forum I'm on (older membership overall) has a bunch of threads with painful stories from folks who have done their darnedest to avoid debt, including never owning a credit card ever, and when they start applying for loans for extremely large purchases (mostly mortgages or car loans) they get turned down because they haven't "proved" that they can handle debt. Many people advocate using a credit card for regular expenses (some people use it at the grocery store; others pay their phone bill with it) that you will always pay off immediately, building credit without building debt. Planned and saved-for doll purchases will work for this too.

 

I'd like to cite myself as an example of how simple this is: I had no credit card, thus no credit. When I tried to apply for a credit card (it was to help my friend get points at work), I was turned down because I had no credit to speak of. Lo and behold, when I did get one from my bank, I bought... maybe two things on it. Most likely just one simple purchase, and I paid it off the next month. I applied to the same store for the same credit card some time later, and BOOM! Instant approval because of my Impeccable credit. XP I have yet to use my bank credit card since then. I probably should buy something else with it before my score disappears. XD

My parents work as loan brokers, so I'm constantly hearing about people spending beyond their means and hearing my dad give them the lecture of how simple it would be to build good credit back up. The idea of going into hard-core debt for Anything, let alone dolls, is just... common sense to me. Don't have it? Won't get it any time soon? Don't spend it. If only the government could apply this basic concept. XP

 

Re: student loans - It's true, and I agree that putting it in a savings account of a responsible friend or parent who's not cosigning would be a better option.

As for the credit, another good way of doing that is letting clothes stores hawk those "GAP cards" or whatever at you. As long as you pay them off AS SOON as you get home -- after all, we're operating on the idea that buying on credit is bad, here, so you weren't going to buy $200 worth of clothes with money you don't have, right? -- they tend to get you discounts, and boost your credit score. We have three or four, each of which have been used at the absolute minimum necessary per year to not get fines, and paid in full each time.

 

I second this... My very first "credit card" was a Victoria's Secret card, which I use exactly twice a year at their semi-annual sale. Then I'll pay off the card as soon as my bill comes in at the end of the month. I get a bunch of stuff for a super-discounted price, while building up my credit at the same time.

For the longest time, I refused to own a credit card at all. But now that I'm older and starting to look at the possibility of getting a house a few years down the line... the fact that I have very little credit is almost as bad as having bad credit.

That being said, I haven't bought a doll using a credit card yet. *crosses fingers* Though it's been tough to say no sometimes, when a gorgeous new limited comes out.

Short answer to the OP question, there is absolutely NO luxury item that is ever worth going into debt for, dolls included.

I will admit I do have the same opinions a lot of times when I read those threads... but sometimes, things do happen. There was a period of time last year when I found out I needed surgery (and my insurance wouldn't cover a good-sized chunk of that), my cat needed an expensive surgery, and my car was broken into & trashed, all within a period of two weeks. The grand total for surgery, car repairs, and vet bills was admittedly more than I had set aside in my emergency fund... I'd never imagined that I could have had three emergencies all at once. Add to that the fact that I was out of work for a week without pay (due to the surgery), and it was pretty much a financial disaster.

I did end up selling some dolls, though on my sales posts I didn't go into details. I just noted that I needed money quickly so I was selling some of my dolls. At the time, I didn't feel like the general public needed to know the reason behind it.

So while I do have a bit of a critical attitude toward those types of sales posts, I try to maintain some compassion. Sometimes there really are financial emergencies that you (general "you") just could never have seen coming.

 

I think part of it for me personally, is I don't appreciate the inerrant attempt to guilt and/or gain my sympathy by sharing a story regarding the seller's need to sell things because the seller has managed to not necessarily budget wisely.

If I read about the same troubles in someone's LJ I would feel a lot more sympathy. (Then again I might not as I might know this is the 2nd or 3rd or 4th time this person has gotten themselves into this situation again or know said person just went on an expensive vacation only a few months before this.)

Seeing a posting as "quick sale" doesn't automatically make me think someone is having debt issues. They could just want the money for another doll or even another hobby.

I guess what I'm really saying is I don't appreciate being invited in to see someone else's debt management issues via a sales thread on DoA or even worse in a Problem Transaction thread, where the seller has already spent the money from the sale to cover debt and there is now a problem with the sale.

I'm not offended. I just wanted to share that not all hobbies need to be expensive and some are definitely more budget minded. While bordering on OT, the really rare postcards when I was actively collecting for my subject matters topped out around $20-$25 still making it a relatively affordable hobby. It is fun because it's like owning a little piece of history.

The problem is I just sort of think there is always going to be something that surprises you.

 

I put doll stuff on credit occasionally. That's how I got my Lusis....I didn't have the money during the ordering period, so I put her on my credit card and paid it off over the months that I was waiting for her to arrive. I don't mind charging things because I never ever miss a payment, and I always pay way more than the minumum amount. My credit cards have low credit limits so I can't go too hog-wild anyway =)