When I was in my first
year with my employer, I was convinced by my colleague on taking a personal
loan who is also taking a loan at that time. She told me about the advantages
of taking a loan. She said that she has plans for the money and since the money
depreciates over time due to inflation rate it is better to take a loan and use
it to finance a business venture or invest it in things that will appreciate
its value overtime.
I was a bit
hesitant at that time because I was a new in the company and I am a type of person
that don’t want to take a loan (considers paying high interest rate and
repayment takes a long period of time). In the end, I was influenced that it is
a good idea. But the problem is; I don’t know where to put the money just in
case my loan is approved.
I will have my
first-ever vacation after almost 2 years and I thought that I could ask my
family where I could invest the money. And since it was my first time to go for
a vacation, I want to give some gifts to all the members of the family, so I
bought them gold and I also bought some gadgets for me. So in the end some
chunks of the money were given away/wasted. I wasn’t able to control my spending,
my mistake. That is the psychology of money; we spend because we know we have
the money to spend. Tsk, tsk, tsk.
After that time,
I wasn’t sure where my money went. I have invested in a real estate but it
doesn’t give me anything in return. Although it appreciates its value overtime
but it is a long term investment and is not liquid.
So here’s what I
learned from taking personal loans:
§ Understand if you need a loan. Investors are usually doing this as it is considers
a good debt if it will use to finance a business or investment that will give
you higher returns.
§ Don’t take a loan if you don’t have any
concrete plans for using it.
What will happen is that you will use the money in things that are not needed
or just to satisfy your desire.
§ Assess your financial status. Check your capability to pay the loan in the
coming years. Review your financial status if you could still save while paying
the loan.
§ Have an emergency fund. There may be other expenses that will incur in the
investment that you will be entering, so it is safe to have extra money intact
for emergency use.
It is an
advantage when you take a loan to be used for investments that will grow
overtime. The money that you loan will
depreciate its value as time goes by. As you pay your loan after 4 years, it
will be like a small amount compared to the investment or business you have put
up. Eventually (by God’s will), the business/investment you have will pay for
the loan you have taken. That is what you call a “good debt”. But if you spend
it on unnecessary things, you would end up in trouble. So be wise in investing
your money.
God bless us more
J
“The rich rules over the poor, and the borrower is servant to the
lender.” – Proverbs 22:7 (NIV)
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