A few short years ago, we thought of technology as a luxury. Now, it runs every aspect of society, from our communications with friends and family, to our work, banking, shopping and exercising.
Compared to big bills like rent or mortgage payments, we may not think of tech spending as particularly impactful. But ‘buy now, pay later' deals and unaffordable phone contracts can lure us quickly into financial ruin if we don't keep up with the payments.
Short terms solutions, such as covering bills until your get paid can be covered by loans from the likes of Omacl.co.uk if you have bad credit.
For more serious debt issues there are ways to deal with it, including debt consolidation or getting an IVA, but it is far better to avoid it in the first place.
With tech companies turning over more than $6 billion a year in profit, we should all make sure we're not getting into financial trouble just to line the pockets of billionaires. You might think you need the latest iPhone, only to spend thousands of pounds on a phone that is essentially the same as your old one.
In this article, we'll cover exactly how to make sure your tech spending doesn't get you into debt, including how to resist the marketing tactics of tech companies, and how to cut back on your tech spends.
How can you make sure your tech spending doesn't get you in debt?
You can make sure your tech spending doesn't get you in debt by avoiding ‘buy now, pay later' deals on tech, and switching to pay-as-you-go or a cheaper contract for your mobile phone.
You can also avoid debt by ignoring the psychological tricks that companies play to get you to spend more on tech, and selling or recycling your old tech for money.
Don't fall for the tricks
Like any successful retailer, tech companies know exactly how to manipulate you to spend money. The key is to arm yourself against their tactics, so that when you buy something, it's part of an informed decision.
We've all taken advantage of a free trial, thinking that we can easily cancel in a month or two. What happens? You forget you ever took it out, and rack up more free trials on other websites and apps. Before you know it, you have payments that you barely remember signing up to coming out of your bank account, puncturing holes your financial stability. Businesses often perform the tactic of allowing you to register for a free trial with just a few clicks, while making you call a number and talk to someone if you want to cancel. With younger generations becoming more averse to phone calls, this is a reliable way of making sure that people end up paying for subscriptions to avoid the hassle of cancelling.
Limited Time Offers
Tech companies will play on the anticipated dopamine hit you get when you buy something, by making you feel like you'll lose an item if you don't buy it now. Companies know that if they can push you into an impulse buy, you'll spend more money than if you go away and think about the purchase. Online tech retailers will often offer sales prices that last a limited amount of time, or a purchasing plan which makes the tech seem like it costs far less, as you'll be paying it over a longer amount of time (although, ultimately, you'll end up paying more than if you bought it outright).
Attentional bias is a trick that our own brains play on us. Say an advert for a new smart watch catches your attention – it's sleek and smart and cool. After you've seen the advert, your brain reminds you of it, and, because of that reminder, you start to think about it more. You imagine yourself wearing the watch, its face glinting against the cuff of your shirt. It bleeps you through ticket barriers and supermarket checkouts, it counts your steps and helps you track exercise goals, you lose weight and get into the best shape of your life… before you know it, your brain has created a whole narrative around this thing you've seen once, and you're desperate to buy it because it will change your life. According to Trent Hamm at Lifehacker, the best thing you can do to beat attentional bias is to read negative reviews of the item to balance out you ideas of its perfection, and to consider the ‘opportunity cost', which is the things you'll take away from if you buy the item (for example, if you spend several hundred pounds on a smart watch, it means you can't put money towards the house deposit you're saving for).
The 30 day rule
A great way to beat the impulse buy (which, once the rush of purchasing new tech is over, can leave us feeling deflated), is to wait 30 days before you buy something (obviously, this relates to non-essential items). Once the desire to buy the item has passed after 30 days, you can forget about it. If you're still thinking about it, you can revaluate whether you can afford to buy it. Even if you can't manage 30 days, waiting a week or a few days slashes the desire to impulse buy tech that you don't need or really want.
Beware of ‘buy now, pay later' deals
‘Buy now, pay later' deals are booming, and they are a dangerous and unregulated industry. ‘Buy now, pay later' (BNPL) providers such as Afterpay, and ZipPay tempt customers into spreading the cost of technology and gadgets over a few weeks.
BNPLs are tempting because of their promises of interest and free-fee borrowing.However, unlike a 0% credit card, you will have to repay the balance within six weeks or less, or risk accruing late fines that could increase to much more than you originally paid for the product. As BNPLs don't do any credit checks, it is up to you to decide whether you can afford to pay off the tech you're buying. If you're wrong in your calculations, you could end up in a lot of financial pain.
‘Buy now, pay later' schemes are unregulated by the Financial Conduct Authority (FCA), which means they don't have to warn you about what happens if you don't pay, or do any checks to see if you can afford repayments. This makes BNPLs an easy route into unaffordable debt. You can't take any complaints to the Financial Ombudsman, which leaves you at risk. Making late payments through a BNPL could negatively affect your credit score, and your ability to buy a house or other important assets in the future.
Avoid mobile phone debt
The first thing you can do to avoid mobile phone debt is to use choose pay as you go, rather than a monthly phone contract. It might sound impossible if you're in the habit of upgrading your phone every time a new model comes out, and paying it off monthly, but hear me out.
Price Comparison site Uswitch.com says it's pretty much always cheaper to buy a phone outright, and then sign up to a fairly priced SIM-only deal. With the iPhone Xs, for example, you'll save up to £400 if you buy the handset outright, rather than paying it off every month on contract.
If you have a perfectly good phone and you're coming to the end of your contract, this could be the perfect time to switch to pay as you go, and start putting aside the money you'll save on other important things. Not only does buying a phone on contract tie you into payments for a fixed period of time (up to two years), but you'll be charged £20 or more to upgrade your device at the end of it.
If you do go on contract
However, if you do want to go on contract because you can't afford a phone outright (totally understandable), it is worth comparing prices for phone contracts so that you know you're getting the best deal. Remember that you can usually only do this if you're at the end of your contract, as ending your contract early to get a better deal will result in expensive cancellation fees.
If you're thinking about cancelling your phone contract early because you can't afford the payments, contact your network provider. They may be able to move you down to a lower tariff, so that you're paying less money each month.
Buy refurbished electronics
Buying refurbished electronics saves you a lot of money on tech, and, unlike ‘Buy now, pay later' schemes, is unlikely to get you into debt in the process. Refurbished electronics have an unfair reputation for being virus-ridden, or breaking the day after purchase. However, if you buy them from reputable sites, many refurbished electronics are as good as new, and a fraction of their original price. Sometimes, the word ‘refurbished' is just used to refer to an item that has been returned, barely touched, by a customer, but the retailer is unable to sell it as new and must offer a significant discount. You can buy refurbished computers, televisions, laptops and mobile devices that are in perfect order, but just have a slight scratch or scuff.
However, you have to be careful where you buy refurbished tech products from, to ensure that you don't get burned. Brands like Apple, the Dell Outlet have brilliant refurbish systems, as do HP and Sony. Make sure you buy these refurbished products directly from these manufacturers, as they will have stringently tested and (if necessary) rebuilt the devices themselves. You can also buy from authorised dealers such as Amazon, who get the refurbished products directly from the manufacturer.
Make money off your old devices
How many of us have old mobile phones kicking around in the backs of drawers? It's easy to forget about these, but, depending on what model you have, you could easily make a few hundred pounds from selling them. The network provider O2 offers a phone recycling service, and an old iPhone 11, for example, could get you up to £370. However, the price decreases pretty dramatically once you get to the older models, so if you have an older phone, you may get more by selling it on eBay or Amazon.
If you're already struggling with debt
If you are struggling with debt, I can promise you that you're not alone. In the UK, the average amount of debt per adult is over £30,000. Being in debt can be a really stressful experience, but there are lots of ways for you to deal with debt and write some or even all of it off for good, for example, through a Individual Voluntary Arrangement (IVA), or a Debt Relief Order (the Citizens Advice Bureau has a lot of useful information on your options for dealing with debt).
Putting tech debts on an IVA
You may well be able to put tech-related debts on your IVA. Your IVA agreement can include everything from payday loans and catalogue debt, to council tax, water arrears and more. However, you should always check with your Insolvency Practitioner (IP) as to what debt can be included in your agreement, as they can advise on your personal circumstances.
If you're struggling to make mobile phone payments
If you're struggling to pay debt you owe on a mobile phone contract, don't just ignore it. While this is tempting, unpaid mobile phone debts will often be handed over to debt collection companies, who will continue to contact you, and may eventually take you to court. While you won't to go prison for in the UK for owing money to a debt collection company, you may eventually be made bankrupt and lose valuable assets.
Always speak your network provider if you are struggling with mobile phone arrears. Many network providers have support in place for customers who are struggling to pay their bill. This may include:
- Changing your bill date to a more affordable date
- Moving to pay-as-you-go
- Staying on ‘pay monthly’ but moving you onto a lower tariff (lower costs)
- Delaying payments for a period of time depending on your circumstances
Sometimes, your network provider can cap your monthly allowances, so that you don't go over your usage limit. This is a good way of avoiding a large and unexpected bill at the end of each month,
Can bailiffs take my tech devices?
Bailiffs cannot take any electronic goods which you need for your studies or job, up to a maximum of £1350.
Bailiffs are not allowed to take any goods belonging to a child, including electronic goods such as an Xbox or TV. However, if these are not in your children's room at the time of bailiffs visiting, it may be difficult to prove who owns them.
Bailiffs cannot take your mobile phone, if this is your only telephone. Mobile phones are considered an essential item, unless you have several phones or a landline, for example.
We've now covered several ways that you can make sure your tech spending doesn't get you into debt, and we hope you've found it an illuminating read. If you are struggling with debt at the moment, we hope you've gained an insight into how you can cut back on tech spending, and put the remaining amount towards your debt payments or savings, ready to enjoy a financially secure future.