Financial fluctuations are there in everyone’s life, sometimes you’ve a lot of money to satisfy all your needs and desires, and sometimes you face cash shortages or expired of money, and all your important tasks remain unattended. You may run short of money if there is a time for them to pay your bills or short term credits. In situations of a business, you might face cash deficits or cash shortages nearly the time whenever you needed money to fund some important equipment or perhaps a project.
So in short, the point is that you will have to borrow somewhere, somehow in your life either from an acquaintance, family member, or from financial institutions. This article discusses about the perfect time to borrow, and ways to be wise about borrowing.
- Don’t borrow money blindly, first analyze your sources of income, and calculate the maximum amount you normally earn in a specific month. After implementing this, make sure that you can return the entire amount (Normally in case of a temporary loan), or can pay the interest payment (Normally in situations of a long-term loan) after making all expenses. Borrowing money without making a complete examination of your cash flow could be very dangerous.
- You should be sure that you would be able to repay the debt on due date. There are many people who borrow money just due to the hope that somehow they will arrange money to repay the debt. Though, hoping is a good suggestion, but practically it’s a serious step towards conflicts, and losing your credibility. Do confirm your source of repayment, and if you aren’t convinced with the source of repayment, then avoid taking a loan so early, and give your decision another thought.
- Don’t borrow money to fulfill your superfluous needs like if you say I want to borrow money because I have to buy some form of recreation, this is not cash is borrowed for. The best reason to borrow money is, whenever you borrow money to boost your future earnings, for instance, you are borrowing money to fund your educations or you will spend it within a market ready training program. Another reason might be you would like to fund a recently won project from a good organization. So, you should borrow money as a way to improve your future income.
- Another great reason to borrow cash is you would like to purchase marketable assets like property, land, financial instruments (Shares). These are the matters you’ll be able to recover cash from in future. The good thing is that if you face pressure of repayment, you can easily pass them on in a greater price. Though, shares may end up in a loss, but land and building will give you profit just about any time.
Always go for a loan if you have a solid reason, but don’t avail it for fun as in this case you generally don’t have proper plans of repayment.
Don’t make it a habit; always choose to borrowing as a final measure when you don’t find another way to fulfill your urgent needs.