With the increase in the number of credit facilities available, ordinary Nigerians have seen things that were once fantasies becoming reality. Some necessities that could only be dreamt of are now within reach. Consumer goods sales have gone through the roof. Computers, washing machines and air conditioning units are filling houses and leaving stores. But is this all good news?  What are the hidden traps within the dream it, get it and pay later credit schemes? The question behind all eyes looking at the pay later billboards is, "is it too good to be true?"

Cynthia told us “even though I'm an accountant, this life is not about accounting, I cannot come and kill myself, I have to eat and enjoy life”.

While this may be innocent and humorously mischievous, it is the root of all financial problems. The inability to plan strategically for what you can control and make contingency plans for occurrences you can't, keeps you in a financial thread mill, running from bill to bill.

In fact, personal financial planning turns contingencies into opportunities. Kelechi, a software engineer in a tech start-up opted for a second-hand MacBook as his personal computer because he felt he didn't need an all-powerful PC just yet. So what does he do with his income?

He invests. First, Kelechi splits his income into four parts; Investments, Rent, food and groceries, and emergencies. Kelechi’s investments which contain a large crypto portfolio, consume 40% of his monthly income. He is still buying even with the market being bearish. 20% goes to his rent savings, 20% to food and groceries, and 10% for emergencies. He claims his MacBook fell into the 10% emergency fund saved, so he didn't miss a beat with rent or life goals.

On the other hand, Amaka, a customer care rep on the island doesn't quite agree with this narrative. Amaka who is married and a mother of three has used a pay later credit facility for family needs. Recently, she acquired a new generator set for her family. She said it was a necessity and she was happy she made the plunge. She has only a cooperative savings scheme that requires her to save just N20,000 (less than 20% of our income) she says that her growing family is very demanding on her finances and she is happy; she has a supportive spouse and happy children at the end of each month.

Enters David, a Customer Experience lead working in Lekki. David has a few good words for pay later credit schemes. According to David, he bought his first laptop during his MBA program with a pay later credit facility and paid an extra N10,000 as interest. He said it was worth it. According to him, he couldn't have had access to research materials during this period of his life without that brand new laptop. David is emphatic that every decision has a cost, whether to save or to buy on credit. But you must consider the cost of your choice. For him buying a brand new laptop for his MBA program outweighs the cost of the loan. David is of the opinion that you should borrow only when your need is great, the interest should be affordable to you and you can still save even after paying the monthly rates for your debt.

The question of how much is too much led us to seek a professional’s advice on pay later loans. We spoke with the resident accountant at Rent Small Small, James Otachie. James believes that pay later loans are wonderful inventions that are making lives better. He pointed to Rent Small Small’s sister venture Furnisure which makes world class furniture available on a monthly repayment plan. But he also pointed out that when a person acquires too much debt, it can lead to financial and psychological troubles. He believes that no one should incur debt above 15% of their monthly income. He initially insisted on 10% but said a tolerance of 5% is allowable.

What are your views on these pay later schemes? Let us know in the comment section.