The purpose of writing this write-up is to enlighten you about some reasons why you should never take a personal loan. Many individuals have landed in financial traps because of the improper ways they have spent loans. I don’t like the idea of taking a loan to cater for expenditures. From my perspective, I believe that loans should only be taken to make investments. But nowadays, many people have started taking loans for irrelevant purposes. In this write-up, I have combined some things you should never spend a loan on.
Where a lot of individuals start making financial mistakes is by buying, building, or renovating a house with loans. It’s not advisable to borrow money to buy or renovate a house. As much as you may not enjoy being a tenant, you should wait for the right time to buy or build a house with your savings or windfall. Some people will even take out loans to renovate their homes if they expect visitors. It is a bad idea, and you should stop showing off! You should only spend money on things you can afford. Stop putting yourself in financial bondage because you want to impress people or want to be seen as rich or classic.
Stop comparing yourself with other people. Maintain your class, save, invest, and, as time goes on, you will become financially stable and capable of owning a house.
If you dream of building a house, don’t wait till you save up the estimated amount to carry out the operation. Start small. Get land, then proceed to build little by little, percentage a portion of your salary to fund the project. If you are planning on saving the estimated amount before you start building, then you might not be able to build a house in years. Other expenses might come up along the line, and you would be left with no choice but to use your savings to build the house to cover them.
Moreover, people also go to the length of taking loans to purchase cars. My advice goes thus: before you use that borrowed money to buy a car, ask yourself if the car will be an asset or a liability.
When a car is an asset, it should be able to yield a good sum of money that is enough to cover the cost of managing it as well as add more value to you. A car is an asset to someone who wants to start an Uber business or start a mobile shop.
Do you want to buy a car to show off or look more classic? Are you financially stable enough to own a car? Is your income high enough to cover the cost of fuel or gas, brake fluid, engine oil, tires, servicing, and maintenance, paying for car wash services, and all other hidden expenses? Because you made some huge amount of money doesn’t mean the next thing to do is buy a car by borrowing money to buy it. You shouldn’t opt for installment payments to buy a car.
It is funny that some people now borrow money to plan occasions. As an individual, you should discipline yourself to always cut your clothes according to the material available. Plan your wedding ceremony, birthday party, funeral, or naming ceremony according to what you can afford and your financial status. You should not borrow money because you want to give your loved one a befitting or memorial burial. Don’t take loans because you want to celebrate yourself or make someone feel loved on their birthday. You should wait for the right time when you are financially stable to plan for your wedding and also think about future expenses.
Some people have landed in financial traps after borrowing to plan big occasions because they hoped to get cash donations and gifts from their friends and people they thought would grace the occasion. But, to their surprise, many people did not show up, and those who did attend the occasion didn’t gift them much. To be on the safe side, plan your occasion around what you can afford.
Likewise, don’t take loans to buy clothes and other luxuries. As an individual, you should try as much as possible to live on what you can afford and plan your lifestyle around that income. Don’t try to please or impress your friends and family by borrowing money to buy expensive ceremony attires worth millions when you are not financially capable of buying them. Avoid living a fake lifestyle, as it tends to make you financially stagnant.
In addition, going on vacation or a fun trip You might want to impress your family or your partner by taking them on fun trips and vacations during the holidays. But trips like that should only be sponsored with part of your savings or windfall. If you don’t have enough money, it’s better to make your family understand your financial status. Open up to them about what can be afforded and what can’t be. This is better than taking loans and falling into financial traps.
As an individual, you need to stop comparing yourself with other families or people in terms of how they go on vacation both at home and abroad. Live on what you can afford!
Presently, people are fond of buying phones with borrowed money. Due to the inflation rate, the price of mobile phones has increased. Therefore, it is not advisable to buy an expensive mobile phone with borrowed money or to pay for it installmentally if it’s not for business purposes.
A phone that will not help you generate additional income but will instead increase your expenses should not be purchased with a loan. you should not go for installment payment plans. The installment payment plans for phones are similar to personal loans. It also attracts interest, which is even higher.
Although some people’s professions require that they have a phone with a quality camera, examples include upcoming fashion designers, artists, musicians, models, shoemakers, and others. They need to take pictures of their work daily or record short videos to promote their business on social media. It tends to save them from having to pay for a photo shoot every time. So applying for a smartphone that they can pay for installmentally isn’t a bad idea since they would be able to generate money to pay for it. Similarly, affiliated marketers and freelancers would always need a good smartphone to get their job done.
Bottom line: Be wise and wait for the right time. You can afford a phone if it is going to be a liability.
If you have a need, instead of borrowing money, it is best if you exercise patience till you are financially capable to meet those needs. Money should only be borrowed to create further income and not to fund liabilities.