7 Times You Should NOT Borrow Money
There are times you should borrow money and there are times that you shouldn't.
Read ahead to find out a list of times that you should never, ever borrow money from a lender or a financial institution:
1. When You Have Time To Save
Are you considering borrowing money to buy something like the latest iPod or a pair of Jimmy Choos? Don't. The only time you should borrow money for the short term is during emergency situations.
If you suddenly need a load of cash to pay for a surgery, that's an acceptable situation for taking out a loan. When the latest iPad is released? No! In this case, you have plenty of time to save for the amount you need. The thing you want will not disappear from store shelves couple of months from now on, would it?
2. When You Can Ask Family Or Friends For Cash
If you have the option to borrow money at zero percent interest, then you should go for it instead of formally borrowing money. If you need some cash in a pinch, first ask your family or friends if they can lend you the amount. Technically, this is also borrowing money.
However, as with interest incurring debts, you will not sink further into debt. You have the option to repay the borrowed amount little by little over a period of time without ruining your credit score. Also, payments such as doing a chore or baking a cake may also be accepted.
3. When You Can Get A Cash Advance
If you need money in a hurry, you can always negotiate a cash advance with your employer. These don't usually come with interest rates, and the amount due will be automatically reduced from your paycheck gradually. So, you won't have to worry about missing or forgetting a payment, or a loan shark overcharging your account. Do not hesitate to ask for cash advances, as these are always a better and more sensible option to taking out short-term personal loans.
4. When You Have Things To Sell
Do you have loads of old toys, clothes or ornaments gathering dust in the attic or the basement? If you are in need of some extra cash, you can always earn it by selling or auctioning off things you don't need. Have a yard sale or auction your grandmother's vintage vase on eBay to make some money without doing any actual work. Pawning is also an option. You can pawn an item you don't need and keep the money and let the pawnbroker own the item. All these options are better than borrowing money.
5. When You Can Do A Side Job
Are you always running out of cash each month? Then try taking on a part-time or a freelance job to boost your monthly income. If you have free time in the evenings or the weekends, make an extra effort to do a second job. Save the income from this job for future use, so when you need cash immediately to fix a leak in the roof or to buy a gadget, you won't need to borrow money.
6. When You Can Get Local Help
Most communities may have support groups that help out those who are in dire financial need. Local religious institutions like churches and humanitarian assistance groups like the Salvation Army may be available to help out if you need money immediately for an emergency. Some localities have special groups that lend money or help those in financial need for free. Contact your municipal council and find out about such emergency financial assistance groups that may be able to help you, and save you from having to borrow money.
7. When You Have Savings
If you absolutely need money, it's better to dip into savings than to borrow. If you have set aside some cash for retirement or as a college fund for the kids, take money out from these if you need to. Of course, don't make withdrawals from savings accounts for frivolous things like branded items or expensive vacations. Just to be more financially secure in the future, you might be better off by starting an emergency fund right about now.
Yes, there are numerous alternatives to borrowing money for the short term. If you are savvy enough, you can save yourself from having to borrow money ever again. Carefully consider the options listed above before becoming prey to a loan shark.
Better yet, start saving now, so next time you are in a dire financial situation, you have a cash fund to fall back on. Basically, anything is better than borrowing high interest loans.Get Started!