Have you been taking debts and suffering from financial woes? If yes, then you’re not alone. There are many people who do not know the pros and cons of borrowing money; more importantly, they do not know how to get rid of it once it takes a toll.
But it’s great that you landed on this blogpost because today, we’re going to talk about how you should (not) take debt and take control of your financial situation.
Do Not Borrow Money for Shopping
This one is obvious, but some people, especially women (in the least possible sexist way) borrow money for their shopping needs. While it is okay to use your credit cards or take money from your friends for necessary items, it is absolutely not right to immerse yourself in debt for shampoo, makeup kits, and a recent Gucci collection.
That’s not what credit cards are meant for, in my opinion. There are hundreds of thousands of articles on the web talking strictly against borrowing money for your “wants.”
The right usage of credit cards or borrowed money is to either spend it on things that you most need or on stuff that can get you some returns.
Do Not Borrow Money for Christmas Celebration or Your Wedding
You have to be really committed towards not increasing your debt during Christmas time. Of course, it is great to celebrate the occasion of our saviors birth, but to put your financial freedom in jeopardy? It’s a no, no. Avoid the urge of buying expensive gifts, toys if you require taking money from your friends or using your credit card.
The key to a great Christmas celebration is to spend what is in your budget and be safe from debts. Some people spend December 25th every year in the most amazing way but the next day, they are seen being worried about repaying the money.
Clearing Debt by Taking Debt
It is absolutely not a wise idea to clear-off existing debts by taking new debts. At a time, when financial stability is more important than ever, you have to be extra careful of your decisions when it comes to debt elimination.
Having said that, there are few occasions that you can consider borrowing money to clear debt including when you need some time to earn money to do it. Getting money from second person would somehow allow you with some time and you can work towards it.
But you have to remember that, your debt elimination process should be a series of intelligent decisions. And, clearing debt by taking debt is not always the right solution.
Do Not Allow Your Interest to Grow
It is not wrong to use credit cards for the right reasons. But whats wrong is, not repaying it on time and increasing the interest. The growing interest on the premium amount usually wrecks your financial stability, so it is strongly advised to pay (at least) your minimum amount on time.
This won’t allow the debt to grow, ultimately leading to financial freedom/independence. So, remember, the key to taking debt successfully is to return it on time.
If You Borrow, Invest It
There are several examples of successful companies that were started off with borrowed money. Calvin Klein was launched after Calvin took a hand loan of $10,000 from his friend. He not only paid off his friend’s money time but created a huge multi-million dollar business out of that money.
Opportunities do not knock on everybody’s doorstep every day, and when you’re able to borrow money for a good reason, then it’s an opportunity in disguise. Utilize it well, invest in ways that can get you good returns or try and establish a business with that money.
In conclusion, borrowing money or taking debt is not a wrong practice, if you’re smart about how to leverage that money and reap the benefits.