Borrow Money

Should Borrowing Money be a Positive or Negative Experience?

There are many people that feel that we should never borrow money. We may have had grandparents that had the motto ‘never a borrower or a lender be’ but actually some borrowing can be a good thing and it is wise to understand when borrowing can be helpful as well as when it can be detrimental.

Most people would not be able to buy their own home without borrowing money. This is because the price of a home is so large that it takes most people at least twenty-five years to pay for it. However, if they were living in rental accommodation for twenty-five years they would be unlikely to be able to save up a lump sum big enough to pay for a home because they would be paying out rent. Therefore by getting a mortgage they can buy a home, live in it rent free and pay it back over twenty-five years or longer. This will not only save them the rent they would have paid in the mortgage period but they then have a home to live in rent free for the rest of their lives.

There are some people though, that get into trouble with their mortgage. We hear about houses being repossessed by banks because the mortgage has been unpaid for so long or people getting into negative equity due to house prices falling. This is why we have to be sensible when we are considering a mortgage. We need to be confident that we will be able to make the repayments and that we will not want to sell the house in the near future. It is worth imagining what might happen in the future with regards to our employment, family and things like that to see whether you think it is the right time to borrow money. If you plan it all well, then borrowing to buy a home should be a positive experience.

However, some types of borrowing can be very negative from the outset. If we borrow without thinking too hard about it and without considering how we will repay the debt, we can get into trouble. By spending on a credit card, for example and buying a lot of things without considering how to pay them back, we can end up with a lot of debt. A credit card does not need to be paid back, so people can end up just paying the interest each month and maybe a tiny bit off the debt. By doing this it could take them decades to pay off the debt and the amount of interest they are paying on it could be really high. It can be tricky to see exactly how much interest you have paid overall as it is calculated monthly and so unless you actually add it up and work out how much you have paid over the years, you may not notice that you are paying out a lot money. It can be easy to have a selection of cards and just paying a little off each and get into a lot of debt. Then when you do decide to pay it back, you may not be able to remember what you even spent the money on and you may feel regret for having done it. However, had you planned carefully and come up with a repayment plan, you could have had a very different approach to it and had a more positive outlook as well.

So borrowing money can be either a positive or negative experience. How it is for you will depend on how well you manage the debt as well as your personal feeling about debt. If you feel in control then you are more likely to have a positive experience of debt. This is why it is so important to plan what you are doing carefully. Comparing different types of lenders and different lenders can also be very worthwhile as you could end up saving money which will help to keep the experience a good one. If you feel that you are gaining something significant as a result of the loan will also help the experience be a much more positive one for you.

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