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Do you really need to borrow money?

do you really need to borrow money?
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This may sound like a silly question, but really … do you need to borrow money? Reaching for a credit or store card, buying goods on credit in general, seems to have become the default position for shoppers everywhere. But when economic uncertainty still looms large, it may be time to reassess your buying habits. Before you flex the plastic, or sign on the dotted line take a step back. Ask yourself the following questions; make a conscious decision about whether you really need to do this right now.

Do I need to spend the money?

It’s that old Need vs Want conundrum. If we are completely honest with ourselves, there are many times when we spend money on things we don’t genuinely need. I’ve just bought a jumper online. Do I need it? No. I have other jumpers that are perfectly acceptable. Did I want it? Hell yes! Onto the credit card it went, and will, all being well, be paid for at the end of the month. Phew. The problems start when that ability to repay your debts vanishes.

It’s so easy to convince yourself you can afford something when the credit is there for the taking. Unless you know for sure you have the money for your purchase, ask yourself each and every time – Can I wait until I can buy this item without borrowing? If not, is there another way I can get it with the money I have, perhaps second-hand, on eBay, or from Freecycle? I certainly need to practice this more.

Can you Pay As you Go?

Sofa and Bed companies regularly woo buyers with deals like ‘4 Year’s Interest Free Credit!’ – all well and good, but it still needs to be paid for at some point. If you must take this type of credit, be sure to pay off a little regularly, making sure you settle the debt completely before the free credit period ends. If you don’t pay as you go, you can bet that in 4 years you are unlikely to have the cash to repay the debt and the interest will kick in big time – and all for the sake of a sofa that is now WAY past its best.

Could you Save up, or Use Savings?

do you really need to borrow money?In our on-demand culture, it seems old-fashioned and boring to save up. But it’s such a satisfying thing to do. Putting aside a few pounds each week or month towards your object of desire will really make you appreciate it when you finally get it, preventing you from getting into debt. If you are desperately impatient, or it’s something for which you have a genuine need, then always look to any savings you have first to pay for it. With interest rates on savings so low, you are better off using your funds to buy the thing you need, then paying yourself back, rather than a credit company whose interest rates may be sky high.

Am I doing Good Borrowing or Bad Borrowing?

There are occasions when borrowing is a good call. Let’s say you secure a new job, for which you will need a car as public transport links don’t work for getting to your new place of work. In this instance, borrowing could be considered a good thing. The new job will hopefully finance the car and bring a little overall financial security with it.

Conversely, if your car is a luxury (you don’t need it for work or school runs, for example) and you simply decide you are fed up with your current model, then borrowing to finance it may not be your best choice. Although no employment is certain these days, a new role is generally more secure than an old job. Borrowing big when you don’t need to could leave you vulnerable, should redundancy strike. It is more of a risk than the scenario above.

The message it simply to be sensible. Borrowers are increasingly questioning their spending habits; this is definitely a good thing. Take a look at your own habits and see if it’s time for a change.

LenderLoan Amount
over 48 months
Representative APR%Cost 
£7,5007.8% APR Representative£181.46 per monthApply
£7,5005.8% APR Representative£174.94 per monthApply
£7,5005.8% APR Representative£174.94 per monthApply
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About Cally Worden

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About Cally Worden

Seasoned freelance writer Cally Worden lives with her family and dog in a quiet corner of rural France. A love of the outdoors, and a fascination with her children's ability to view life with fresh eyes provide the inspiration for much of her work. Cally writes regularly for various websites and UK print publications on subjects as diverse as parenting, travel, lifestyle, and business, and anything that makes her smile.

Website: Cally Worden

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