Is this article high level financial sarcasm?
If you are seriously thinking about financing a burrito u should rethink some aspects of ur life
Burrito Now, Pay Later
201–210 of 364 posts
Re: Burrito Now, Pay Later
#202One reason is that someone’s or a company’s income doesn’t always align perfectly with when they want to buy things. When we're talking about financing the construction of a new downtown office tower, a new apartment complex, or the unexpected maintenance of your business's whole auto fleet, I can absolutely see the argument that credit is a mechanism of greasing the wheels of the economy and allowing things to happe…
Convincing people to finance their groceries is absurd. Ideally, everyone should have a few months’ worth of income saved. And if they do, there's zero reason to finance a burrito. In the Western world, if you have a job but no savings buffer, it’s usually not due to extreme poverty—it’s often a lack of basic financial literacy. Klarna, et al. market in direct opposition to that education.
I finance all my burritos: It’s fantastically more convenient than cash, incrementally builds my credit rating, & I capture some of the efficiency surplus via rewards points.
The article makes the point that BNPL packages up almost the same product into a bite-sized, low-risk (for both the borrower and the lender) package, making it available to everyone. Indeed, that does sound like a good thing.
Re: Burrito Now, Pay Later
#203One reason is that someone’s or a company’s income doesn’t always align perfectly with when they want to buy things. When we're talking about financing the construction of a new downtown office tower, a new apartment complex, or the unexpected maintenance of your business's whole auto fleet, I can absolutely see the argument that credit is a mechanism of greasing the wheels of the economy and allowing things to happe…
There's two obvious "legitimate" reasons to use credit: to smooth out expenditure volatility (a big purchase like a house, an emergency) and to smooth out income volatility (a temporary lack of a job). If you are suddenly sans job and living on savings/unemployment/charity etc., but have a perfectly reasonable expectation of long-term average income much above your short-term situation, financing a burrito makes sens…
If you can’t afford a luxury item, it is fiscally irresponsible to take out credit to buy it.
Credit is legitimate if you use it for an investment (or expense) which will get you higher returns than the interest payments. Not for luxury goods.
Whether a delivery burrito is a luxury good or a basic necessity is apparently up for debate.
Re: Burrito Now, Pay Later
#204I'm beginning to think that consumer debt simply shouldn't exist. If you don't have money to buy something, don't buy it. If you don't have money for necessities (food/housing/healthcare), putting you into debt isn't the right answer anyway. A safety net is the right answer.
I agree, with exception of housing. Most people can't buy home with cash, and for many this is a necessity. But homes are an appreciating asset, which cannot be said about cars or food - this is an investment, actually. But for everything else - cars, phones, electronics, food, subscriptions, jewelry - I 100% agree. Consider two people: * One person has $10k saved, invested into something safe and liquid. Then buys s…
House appreciation is a bad thing. Outside well inflation of replacement, but even there should be some depreciation with wear and tear and aging...
Rents not covering most of amortization would make lot more reasonable system to live in.
Re: Burrito Now, Pay Later
#205Earlier quoted context omitted.
I am so so happy we live in a democracy. Because if your ilk managed to take power, it would only have been possible through violent authoritarian revolution
Just think. If the capitalist soul sucking robber barons weren't hoarding every morsel of wealth they possibly could, policies like this wouldn't cross anyone's mind in the first place.
Part of the trick is to foist on us the economic priests that tell us of the fire and brimstone that will fall on us if governments ever use their currency issuing power for social improvements.
Re: Burrito Now, Pay Later
#206> One reason is that someone’s or a company’s income doesn’t always align perfectly with when they want to buy things. Financing should be used for things that provide value over the time horizon it takes to earn the money to fully pay for them. If you finance things for less than that time horizon, you just end up getting more and more underwater. If you finance something that delivers value for ~6 hours then you pr…
What’s the source of this “should”, and why doesn’t it apply to the majority of businesses that finance the cash flow to sustain short-term operations?
Re: Burrito Now, Pay Later
#207Rarely does an article make me think it's horse manure so early on.
> let the market decide who should hold the risk
Subprime mortgage crisis. . . (This is leaving aside the idea that letting markets decide any given thing is even a good idea in general.)
> financial innovation has been and will continue to be a massive net positive for humanity
Anyone who gets starry-eyed about "innovation" instantly makes me suspicious. Innovation in itself is neither good nor bad. The idea that "financial innovation" will be a positive independent of specific proposals is highly suspect.
The rest of the article looks like a bunch of economics mumbo jumbo that can easily explain why something looks good on paper and just as easily lead us into all kinds of trouble.
Re: Burrito Now, Pay Later
#208One reason is that someone’s or a company’s income doesn’t always align perfectly with when they want to buy things. When we're talking about financing the construction of a new downtown office tower, a new apartment complex, or the unexpected maintenance of your business's whole auto fleet, I can absolutely see the argument that credit is a mechanism of greasing the wheels of the economy and allowing things to happe…
Convincing people to finance their groceries is absurd. Ideally, everyone should have a few months’ worth of income saved. And if they do, there's zero reason to finance a burrito. In the Western world, if you have a job but no savings buffer, it’s usually not due to extreme poverty—it’s often a lack of basic financial literacy. Klarna, et al. market in direct opposition to that education.
> everyone should have a few months’ worth of income saved
Do you have any friends that earn minimum wage? Do you understand the societal incentives that discourages saving anything? Have you seen what happens to minimum wage earners when they try to save?
Our society enables a few different niches before retirement age:
#0: out of work. Discussing this niche be dragons.
#1: $0 balance - spend money as you get it. Discourage savings by training people that saving doesn't help them (fines, thresholds, societal expectations). Can spend ~2 hours wages on pleasure for your 40 hours work. If you care for kids or elderly parents then expect to spend most of your spare money or time on them. Make sure that society blames the $0 workers for their state by saying "if they only did action Z then all their problems would be solved!". Society doesn't really encourage action Z.
#2: working to pay off mortgage. Requires tenacity, skills and often luck. Society makes the jump from #1 to #2 very difficult. A mortgage is one of societies ways to force savings. Those savings often taken away later in western societies (through different ways, including demographics, illness and means testing).
Need to avoid: https://www.astralcodexten.com/p/come-on-obviously-the-purpo...
My two examples are:
A) a friend working 40 hours, gets 1 hour wages (~$20) to spend on themselves after their bills (they don't buy tobacco or gamble, they might spend their $20 on beer). Not academically smart, spends any windfall money on unnecessary stuff. No car. Now retired. I'm not sure what society could have done to encourage them to become financially savvy?
B) single friend on benefit to bring up kids. Missing partner little help. Government applies thresholds to income or savings that heavily discourage both. They were good with money before kids. Most spare money spent on kids. Also spent some money on unnecessary stuff like new carpet or societaly encouraged addictions (smoking and wine). Couldn't spend money on many necessities (didn't find much time or $ spare). Old crappy car. Now kids are grown, they are working and much better with their money again.
As a financially sensible person, I'm unsure how I could have taught either to be better off financially. Their societal incentives were not aligned with that goal. Others might say they lacked the skills or lacked the drive. I suspect they both have ended up being better off by not chasing financial savings.
The weirdest part is that I have wealthy friends that are not making better decisions.
I'm not sure what the root cause of wealth differences actually are.
Context: I live in New Zealand, and I am a financially well off middle aged guy.
Re: Burrito Now, Pay Later
#209> Burrito bonds represent finance doing what it does best: unbundling risk, pricing it granularly, and allocating capital more efficiently.
What finance does best is “creating financial crisis” actually and that's exactly with that kind of tools that it happens. It looks like 2008 is now far enough (17 years, wow tome flies!) in the past that finance people now feel comfortable acting as if it didn't happen…
Re: Burrito Now, Pay Later
#210BNPL is okay for those who don't have a source of income. In my country we have something called Lazypay which I had used quite a bit during college when pocket money was a bit tough to come by. I still use it (sort of) to get discounts on instant delivery apps (if there are any ).
So by existing it does offer some value, though whether it is long term sustainable to dole out small cash loans to people without credit scores (like i was in college) is a good idea or not, that I cannot comment.