When it comes to money, no one has it all together all the time. In fact, most people will need to take out at least one loan in their lifetime. (Many more will need to take out several.) There is no shame in needing a little help, but there is a few do’s and don’ts that can make the process successful all around… and help to make sure that your loan helps you – not hurts you.
- Do Save Money While Repaying Your Loan
There are many different theories about the best way to handle debt from borrowing. Some say that you should forgo savings to pay off debt faster, while others say that you should pay your debt off slowly and continue to save up a nest egg.
In this case, it is important to remember this… considering the amount and length of time you will be paying on your loan, you will be in debt for a while. If you neglect to save up any money during this time you could need to enter another loan as soon as you pay the other one off. So while it is a personal choice, it is always a good idea to attempt to save as much as you can while paying back on your secured or unsecured loans.
- Don’t Borrow Frivolously
In other words, only borrow money when you absolutely need it. Many young people get caught up in the habit of taking out loans simply to buy the things that they want. Then, the day comes when there are things that they NEED and by this time they are so tied up in debt that they cannot afford to take on a new loan. For this reason, it is always a good idea to ask yourself if you are borrowing money out of necessity or on a whim. If you answer the latter, reconsider taking out a loan.
- Do Pay On Time… Every Single Time
Both secured loans and unsecured loans help you to build up your credit. This is one reason why it is so important to pay your payments on time every month. This not only looks good on your credit report, but if for any reason you ever get into a financial bind, your loan officer will be more willing to work with you if you have been an on-time payer for the existence of your loan relationship.
- Don’t Borrow Money Without Telling Your Husband Or Wife First
Money is one of the main reasons that married couples disagree and a loan is no small matter… especially if it is a large amount. Never take out a loan without speaking to your spouse beforehand. Even if you think it will be no big deal… the only way to find out is to have a conversation about it beforehand. You may be able to brainstorm ways to come up with the money together without taking out a loan.
- Don’t Borrow More Money Than You Can Afford To Pay Off
It can be very tempting to borrow more money then you really need when it is being offered to you. If you have great credit, you may be able to take out quite the substantial loan, however, remember that all loans must be paid off and what good is a HUGE loan if you must worry day and night about paying it off?
Only take out the loan amount that you can afford to pay off comfortably. Going over your budget can cause new problems to arise. You may need to be late on a car payment to keep up with a loan payment… or you may even need to skip a mortgage payment. When you think of it like this, it is easy to see how one extra debt such as a large loan can trickle down to create even more debt in other areas of your finances.
Taking out a loan is something that people do every day. Before you enter a loan, you simply need to weigh the pros and cons, making sure that your loan not only works… but works for you and your family in the long-term.