. Our very decision to acquire something less necessary can place a very heavy burden on our households. Of course, there are situations where, for example, we have no choice but to take out a loan in order to acquire our own home. However, we must always consider the possibility that we may not be able to pay back the loan if we have not yet saved a certain amount per month for an emergency or for something we cannot afford on an ad hoc basis. Now, if a person feels no obligation or extra desire to save from their paycheck, if they take out a loan, they simply will not spend that money and will be forced to repay the bank. We believe that this kind of thinking is not good, even dangerous, and puts you, your family, and ultimately your finances at risk.
What is the first question you should ask yourself when considering a loan? It is definitely this:
Whether I have the ability to pay/repay the loan.
So, if you too are thinking of borrowing for something, first sit down in front of a clean sheet of paper and write down your income and expenses accurately and honestly. That way, you will know exactly how much you have left in your monthly budget and whether or not you can afford to repay the loan. However, if you find that your monthly income is less than your expenses (including the amount you plan to pay off the loan), you should reflect on your money management and find another way to manage your finances instead of taking out a loan.
At that point, of course, you are on your own, but later on, the bank will deal with you anyway. And as is well known, banks lend to people who have money. They usually do not lend to people without money. It\’s a bit of a paradox these days, but that\’s OK. There is nothing worse than an over-indebted person who falls to the bottom of the social ladder simply because they don\’t consider the amount of money they have to repay or their financial situation.
Always think of every loan not as a means to get money easily and quickly, but as a means to pay more than the item originally cost at a later date. Thus, you really must have the money.
If you are not in particular financial trouble, just living well off and do not want to change that situation, you may of course consider reducing the amount of repayment and extending the repayment period for the item in question, perhaps You can simply take out a convenient loan. However, one should always consider that the loan term for an item should not be longer than the life of the item. For example, consider the purchase of a newer cell phone. The life of the cell phone is, say, 5 years, but the loan term is 10 years. So what if the cell phone stops working right away, which could easily happen with a two-year warranty? In a few years, when you are still paying off your cell phone, what will you use to make calls? And can you guarantee that you will earn more in the future than you do now? I don\’t think anyone can.
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