MAKE A BUDGET BEFORE SPENDING – PART 5
Loans represent an early form of saving. It is a commitment that is acquired in exchange for having immediate funds at hand. The ideal thing is always to have a budget comprised of accumulated savings while avoiding the payment of bank interest and having to get a good part of our salary from month to month.
Loans themselves do not have to pose a threat, however. Yes, they are something that helps us have a certain amount of money that is available to us immediately, but this is not a reflection of the habitual sin that is committed when a person is driven to make purchases by desire.
In fact, in most cases, loans are acquired in situations of desperate measures, as the only escape route to a particular problem such as a health incident or a traffic accident where it is necessary to pay damages to another car, among much more.
Before Contracting Responsibility for a Loan
The issue with loans as acquired debt lies primarily in the way we assimilate and acquire the commitment to pay. That is why it is more than necessary to study in depth that other alternatives are at hand to avoid the costs of bank interest.
For example, we can receive financial support from our relatives or sell that set of gold jewelry that has not been used for years, the latter being a measure widely used today by many people.
But in the event that there is no other option, then look for and study in depth the interest rates and the financing terms that the bank has to offer us to have a clear cost that in the long term that will imply for our life this decision.
The Measures to Follow
The first aspect to take into account will always be to respect sacredly the value that represents the monthly installments to pay. The danger of not doing well will be reflected in a financial collapse, which in many cases leads people to use credit cards, or refinancing the loan to continue paying for much longer and with discrete banking interests to the end increase the total value of the borrowed capital.
Among Other Aspects to Consider Are:
Establish a savings policy that allows payments to be made in amounts greater than the monthly rate.
Look for extra income alternatives to balance monthly payments.
If you do not prefer to make extra payments to your credit card, save money to reach a larger amount and apply it directly into your debt, which makes interest payments more effective.
Studying Debt Regularly
Among other alternatives to learn to coexist with the burden of debt and recurring payments to be made is to make a payments balance and to study in depth how the requested capital has been paid.
This fact will give you greater clarity on how the debt process has been paid, giving you a good feeling of tranquility. However, beyond that, it also allows you to identify other strategies for repaying the loan, as well as to warn if the bank is being abusive to you by increasing your interest rates – something that is a very common occurrence in the banking sector.