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"Calling all SUCKERS" is going to be a series outlining some of the rip offs and scams you need to be aware of. This first part is about the rent-to-own rip off.

"Rent To Own" is where you pay a company to rent furniture, appliances or electronics. The "to own" part is where, at the end of the contract, if you make all your payments, you either have "bought" the items, or you get to purchase them at some predetermined lower price.

It is a rip off, and a waste of money from all aspects. The offering takes advantage of the "gotta have it now, even if I can’t afford it" mentality that is rampant in credit-laden countries like America. Let me see if I can make this plain:

  • Smart people don’t rent-to-own.

  • People who want to be financially free, don’t rent-to-own.

  • People who want to get out of debt, don’t rent-to-own.

  • People who want to set a good examples for their family and friends, don’t rent-to-own.

It’s is a poor man’s solution. It is a sucker opportunity. If you’ve made the mistake innocently in the past, so be it. Now you know. If you do it now, be sure to take a Sharpie and write "SUCKER" across your forehead.

Rent-to-own is almost a 7 billion dollar a year industry. That’s BILLION, with a "b". People are suckered in with "no money down, low monthly payments" offers. If you haven’t figured it out yet, any time you hear that phrase, get ready to get suckered out of a LOT of money. There is only one type of payment plan for the financially wise: 100% down, no payments.

With rent-to-own, you can expect to pay SEVERAL TIMES the original price for the privilege of owning it. You might rent-to-own a flat screen TV for $1500 and end up paying $5500 by the time you "own it" (the only thing being "owned" is YOU… by the rent-to-own company). You can count on actual interest rates well over 100%. Would you by something on credit if they advertised it as "no money down, low monthly payments, 130% interest"?

Industry spokesmen say they are not selling the items on credit, but "renting". Sorry… if it looks like a duck, walks like a duck and quacks like a duck…. Guess what? The reason for this "renting" vocabulary is to avoid the regulations about interest rates that apply to credit cards allowing them rates that in reality range from 50-400%. Even with all the credit card "fees", it’s hard to get your hands on that kind of consumer rip off.

Unlike some popular authors, I don’t say that the rent-to-own industry is VICTIMIZING people. Nobody twists your arm to go get new furniture and a 72" flat screen that you can’t afford. You do that because of lack of self-control, or even in ignorance. But once you know better, you have no one to blame but yourself.

So what do you do? [TIPJAR]

Have some self-control, save up for the items first, then go purchase them CASH. For example, let’s say that new furniture and TV is $2000 cash and the payment is $150/month. Make those payments to YOUR SELF for about 13 months, and go pay cash for them… and you own them immediately. Or, you can rent-to-own and end up paying over $6000 for the privilege of "owning" a year earlier than if you saved first.

Rent-to-own should be changed to "you rent, we own you".

If you’re already up to your eyeballs in debt the first step is to learn how to get out of debt, and stay out. Check out my book, Life Without Debt here.

I have a list of rip-offs I’m going to cover… send me your suggestion for a rip off to add to this series.