When is the right time to borrow money

Thursday, December 5, 2013

When is the right time to borrow money

Some people have this habit of finding an excuse to borrow money. They would be just looking to have extra cash in their pocket. Some of these guys have a strong penchant for carrying a number of credit cards. They not only have it, but also enjoy using the cards to its limit. They look at borrowed money as a means of income, rather than the amount, which they eventually have to return. 

Image credit: hamsterman / 123RF Stock Photo

If you are one of these guys, then borrowing money is perhaps, not for you. You need to know when and why you may have to borrow money. It is essential to have the right kind of mindset before you borrow money. You should only borrow what you need. Understanding your needs and borrowing will help you to fulfil needs, and also assist you to avoid frequent debt. 

Calculate your requirements

If you can manage your budget, without making too many changes, stick with it. A small need can be managed by making small changes to your budget. I can understand many families, and individuals run their life on a tight budget, but if you know, for example, that you need to spend substantial money two months later for your child’s college admission fees, then you should plan your budget accordingly. 

You have two or three months at your disposal. These are expenses that you know about; therefore, saving little every month will help you sort out your requirements more efficiently. You should borrow money when there is a sudden requirement, and you had no clue about it. Now that you know you are left with no choice, but to make arrangements to pay for it, you have to do something about it. That’s where borrowing comes into the picture. 

Stick to borrowing limits

Just because you know that there’s no option left with you, it doesn’t give you a licence to borrow as much as you can. Remember, the more you borrow, the more you put yourself under tremendous mental and emotional stress. Borrow only in a pinch, the lesser the money you need to pay back, the more relaxed you are. You also have more control on your money.  Drowning in a sea of debt is never a smart idea. You will probably have to swim a lot before you get to the shore. You never know anything can happen in the sea, and you might never end up by the shore. 

Therefore, borrow when you have to, or else it becomes a habit. 

Author: Monica Singh.

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