This scenario, played out in a recent video by Advice with Erin, perfectly captures the concerning trend of using “Buy Now, Pay Later” (BNPL) services for small, everyday purchases. While these services market themselves as friendly financial tools with catchy phrases like “Live your best life, bestie,” they’re actually introducing a dangerous financial habit that can have long-term consequences.
The Slippery Slope of Micro-Debt
I find it alarming how these payment plans are being normalized for items as small as a burrito. The conversation in the video highlights a critical misconception: just because something doesn’t feel like debt doesn’t mean it isn’t debt.
When the hungover person in the video says, “It’s not debt. It’s a payment plan,” they’re falling for clever marketing that disguises what’s really happening. A payment plan for something you can’t afford right now is, by definition, debt.
The psychology behind these services is brilliant but dangerous:
- They make spending feel less painful by breaking payments into smaller chunks
- They create the illusion that you’re spending less than you actually are
- They normalize going into debt for non-essential purchases
This psychological trick is exactly what makes these services so problematic. When you look at your bank account and see only a $5 charge instead of $20, you’re more likely to make additional purchases that you can’t actually afford.
The Hidden Costs of Convenience
As Erin points out in the video, these services often advertise “0% interest and fees” – but that’s only if you make every payment on time. Miss a payment, and you could face significant penalties.
What’s more concerning is that many BNPL services are now reporting to credit bureaus. This means that missing a payment on that $5 burrito installment could actually damage your credit score. The stakes are much higher than most users realize.
“Rich people have a saying that debt is borrowing from your future self. That’s why you should only go into debt over something that you absolutely need to be wealthier in the future.”
This quote from the video captures an essential financial principle that BNPL services encourage users to ignore. When we use debt responsibly, it’s for investments that will improve our financial situation – like education, a home, or sometimes necessary transportation. A hangover burrito doesn’t qualify.
Financial Literacy in the Age of Easy Credit
The conversation in this video highlights a bigger issue: many people lack basic financial literacy. Understanding the difference between good debt and bad debt is crucial for long-term financial health.
Good debt typically has these characteristics:
- It’s used to purchase something that will appreciate in value or generate income
- It has reasonable, fixed interest rates
- The payment amount and schedule are sustainable within your budget
Using BNPL for everyday purchases like food delivery fails all these tests. It doesn’t build wealth; it simply spreads out the cost of consumption over time while creating financial obligations.
I believe we need to be more critical of these services and the way they’re being marketed, especially to younger consumers who may not fully understand the implications of using them regularly.
Breaking the Cycle
If you find yourself tempted by these payment plans for small purchases, it’s worth asking: If I can’t afford this $20 burrito today, should I really be buying it? Perhaps the better solution is to keep some emergency frozen burritos in your freezer for hangover days.
The real solution isn’t spreading payments – it’s budgeting properly for the things you want and need. This might mean setting aside a “hangover food fund” if that’s important to you, rather than borrowing from your future self.
The next time you see that tempting “Pay just $5 today” offer, remember what it really is: an invitation to debt that you probably don’t need. Your future self will thank you for the restraint.