We all take out loans for various reasons; sometimes to fund business ideas and sometimes to take care of urgent expenses when cash is not readily available. Loans might seem like a very great savior every now and then but that loan might be doing you more harm than good. Personally, I stopped taking out loans several years ago and you should too. Here is why;
You have to pay back!
It’s high time people stopped seeing loans and credit cards as free money. It’s not free money; you have to pay it back and most of the time, with a lot of interest. Most times, the costs of taking a loan usually exceed the benefits in the long run. If you are unable to pay back on schedule, you would have to start dealing with accumulated interests, bad credit scores and probably debt collectors ringing your phone incessantly.
As for me, I would always choose proper budgeting and resources management over taking out a loan at any point in time. If I can’t afford it, then I can’t have it.
Loans are avoidable
Yes, you can avoid loans and credit card debts simply by having a working personal budget. That way, you would discover that you would end up having surplus money rather than debts. Every month, I put a pen to pay and I divide my monthly earnings amongst my various financial needs and obligations. Since I started doing that, I’ve not had cause to take out loans because I always make provisions for what I need and any emergencies.
Loans are addictive
There are people who take out payday loans every month just because they have access to it. For such people, it has become more of a habit and they see no reason why they should wait for their paychecks when they can easily grab a loan from a payday lender.
Such lifestyles usually leads to a lifetime of debts because of course, they have to repay with interests and a huge bulk of money which they would have invested or saved for other reasonable things is spent servicing debts.
Not all loans are bad; there are some loans that are good such as business loans, mortgage loans and sometimes, student loans. Before you take out any loan however, you should weigh the long term benefits alongside the costs and carefully decide if it’s the best option for you at the time because sometimes, all loans do for you is to drag you backwards.