Many people are familiar with the situation when there is either not enough money at all, or very little. Bankers convince that the best solution in such a situation is to apply for a loan. However, if the amount of debt owed to creditors only grows over time, it's time to reconsider your approach to finance.
Often the cause of debts is the wrong beliefs of borrowers. It is because of them that the volume of loans is growing, the status of the debtor is depressing, and the borrower does not see a real opportunity to get out of the "debt pit". However, in fact, everything is fixable.
So that the volume of loans stops growing...
When applying to the bank for credit funds, it is worth remembering that the debt will have to be repaid to the lender, and together with the accrued interest. Therefore, before signing a loan agreement, you should think about whether you really need the bank's money. In any case, you should refuse to apply for a loan if the amount of monthly payments exceeds 30-45% of the size of your budget.
Often the cause of debts is the wrong beliefs of borrowers. It is because of them that the volume of loans is growing, the status of the debtor is depressing, and the borrower does not see a real opportunity to get out of the "debt pit". However, in fact, everything is fixable.
- Many people believe that a larger number of sources of income can provide both greater earnings and greater financial stability. Accordingly, if both spouses bring money to the family, and even from several jobs each, this is an ideal option. Alas, this does not always happen. Ideally, if part of the earnings can be saved in the form of savings. But most of us prefer to spend the entire amount that we manage to earn. Accordingly, daily expenses for food and the purchase of industrial goods are increasing, the volume of loans for large purchases (housing or a car) is growing, and I also want to buy furniture and household appliances of higher quality and more expensive. And if one of the spouses loses his job and expenses have to be reduced, getting used to life in conditions of economy will be unpleasant. Multiple sources of income are great, but only if it helps to create a financial reserve.
- Another common belief for us is that it is better to buy than to rent. This is quite a fair statement if we are talking, for example, about an apartment or really necessary household appliances. But very often expensive things are bought, which are subsequently used only a few times. Many far from poor European residents will prefer not to buy an expensive dress or a high-quality audio system, but to rent it. Avoiding unnecessary expenses is a smart way to make the family budget less scarce.
- A large volume of loans is not a hindrance to making a new loan. In fact, today some borrowers, unable to cope with the repayment of debts on existing loans, are trying to pay off banks through the issuance of new loans. Knowing this, bankers began to refuse more often to provide funds to borrowers who already have several active loans. A negative refusal by bankers is likely, even if the borrower's credit history is absolutely flawless. A strong argument for granting a loan will be the availability of an official income statement, the involvement of a guarantor in obtaining a loan or the provision of collateral.
- Having small incomes, it is useless to think about investing, and making loans is a necessity. In fact, it is almost always possible to save money. For example, many pensioners who have incomes only in the form of very modest pensions, at the same time successfully open and regularly replenish bank deposits.
When applying to the bank for credit funds, it is worth remembering that the debt will have to be repaid to the lender, and together with the accrued interest. Therefore, before signing a loan agreement, you should think about whether you really need the bank's money. In any case, you should refuse to apply for a loan if the amount of monthly payments exceeds 30-45% of the size of your budget.