It’s time we asked whether we really need to borrow

If you’ve read some books or articles about personal finance, you probably realised it’s really a bad idea to borrow money. Almost all posts and articles about personal finance will tell you not to be in debt and not to borrow money you can’t pay or will struggle to pay.

In most cases, these things you read about borrowing money are good pieces of advice. The idea of borrowing money is really about borrowing from future you. You get to use the money now but it won’t seem like such a good idea several years from now when you’re still trying to repay it. Basically, debt is a financial parasite that sucks money out of your future earnings leaving you with less to save or spend.

perth news

Borrowing money.

However, there are some times that it is not bad to borrow money. For example, it is easy to borrow money during medical emergencies. No matter how diligently you plan your finances, a medical emergency may occur and can cause all your financial plans to spiral out of control. Borrowing money might not be an optimal solution to medical bills you can’t pay at the moment but it would be much better than seeing them go on your credit reports as unpaid.

During times when your car, machineries, electronic appliances, or anything that makes your life easier breaks, it is also okay to borrow money when you don’t have enough cash for repair. In this modern age, it’s tough to live without the equipment, vehicles and appliances that we rely on. If you’re your unable to work out an affordable repayment plan with the repair shop, then a better option could be to take out a personal loan to pay for the work.

Credit can really be a great advantage to anyone, but only if it is done wisely. For more on how to borrow money the smart way, check this out:

You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.