STRATEGIES FOR WISE BORROWING

All of us needs to borrow money at some point during our lives, be it from a friend, a family member or a credit provider. Borrowing money enables us to pay for things that we otherwise would not be able to afford, eg a house or a car. It is, however, very important to have a strategy when it comes to borrowing, and not get caught in a debt trap that will take many years to undo and will cost a lot of money.

Pay cash when you can  

In today’s world of instant gratification, it is very difficult to put off buying an item until you have enough money saved up to actually buy it, thus, you get a credit facility with the store and get that item now, even though it does not belong to you until six months and some interest later. Be aware that borrowing money costs money, so rather try to save up and buy the item later when you can pay cash. A good rule to follow is if you can’t afford it, you probably do not need it.

Know your credit status

Should it be necessary for you to borrow money, know where you stand with your credit. Be aware of all your monthly repayments, so that you do not end up battling to have a decent lifestyle because you are servicing too much debt. Also, DO NOT borrow money to pay off other debts. Shop around When you decide to borrow money, do not just sign up with the first company that offers you a loan. Shop around. There are many credit providers out there who may be willing to give you better terms on your loan. It is very important that you understand the terms and conditions of your loan, and never sign a document that you do not understand. Pay more than your monthly installment

Once you have borrowed money, try to pay more on the loan than the minimum installment. In this way you will be able to pay back the loan quicker and it will cost you less in interest.

Credit is not necessarily a bad thing, if you use it wisely and carefully. Always remember that credit can be your friend, but it can very quickly turn around and become an enemy if it is not managed with the utmost care.

 

Further reading

1.       http://www.lendersandloans.com/wiseborrowersguide.php

2.       http://www.access2loan.com/Wise-Borrowing.htm

3.       http://www.ncr.org.za/Consumer_Tips.php

 

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Process of debt counselling

When should you seek debt counselling?

How to get out of debt

 

 

 Copyright © 2010 Amelia Aitken

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