Always Borrow for Needs, Never for Wants
There are a few reasons why people would end up over borrowing on personal loan and it almost always have to do with materials wants rather than need.
It was recently reported in the news that a couple landed themselves in more than $100,000 worth of debt with personal loan after their wedding.
While marriage is a once-in-a-lifetime affair and many dream of having a dream wedding, planning one without the consideration of cost will guarantee to kick-off your marriage with a rocky start.
Here’s what Mr Lee, 35, told The New Paper,
“We have had more fights since our wedding than in the six years that we were dating.
Most times, it was over money… and we’d end up blaming each other for the situation.”
So, how we can make sure we don’t land ourselves in such a situation?
Plan Your Personal Loan Carefully
Reasons why people tend to over borrow is because they plan with the mind-set of achieving a material want. We often tend to convince ourselves that we will be able to take care of the debt later on when all is over, but it has been proven over and over again that it’s not the case.
Once you have land yourself in debt, you will find it harder to keep up with your current lifestyle with a smaller amount of budget every month. And more often than not, you will borrow to fulfil that particular lifestyle, landing yourself in even more debt.
Such as the case of a couple who landed themselves in debt after their marriage and proceed on to buy a five room flat and had a child. They got so much debt that it threatened their marriage.
So instead, when planning for major life events, such as buying a flat or having a child, always try to plan your finances beforehand. Sit down with your partner and separate items between wants and need. (e.g. do you really need to hold your banquet at a hotel instead of a restaurant?)
By carefully listing out the items, you can then successfully plan for what is essential, and if necessary, take on a personal loan to achieve what is needed.
If you are only asking for a small loan, your friends and relative might be able to help
Instead of going to financial institution, which charges for interest rates, you may try approaching your family or friends for a personal loan.
Most people are wary about lending to their family because they are afraid of the awkwardness when it’s time to ask for their money back, and also the possibility that they won’t.
However, if you can work out a weekly or monthly return plan, they might just be willing to do so.
So, our advice is to never take on a personal loan for a material want because you tend to overestimate your repayment ability. And even when you need one for a need, make sure you have a plan on how you wish to make the repayment.