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It is a fact of life that at one day you have a lot of cash and none the next. This is especially true for business owners who actually have the experience of dealing with erratic cash flow. It’s different when it comes to fixed income earner. Their income comes in steadily each month but their problem is keeping the income within the expenses they incur. However both individuals (businessmen and wage earner) usually have the same route when both are short on cash. They tend to borrow money from financial institutions or from any MONEY LENDER that they can find. BORROWING money is really not that bad as long as you know how to do it correctly. Availing loans is a good thing as long you use the proceeds to better your future.

Never Borrow Money without Initially Analyzing your Financial Situation

We can always accept the fact that love can be blind. But when borrowing money, make sure that your eyes are wide open. Before even contemplating on filing for a loan, thoroughly study and analyze your earnings and income sources. Make a good estimate of your monthly earnings to find out if you can manage the amortization payments for a short term loan and/or interest payments for a long term loan.

Following Repayment Terms

Make sure that when you sign the loan agreement, you will be able to repay the debt on the specified repayment date or able to remit monthly amortization payments without fail. If you even have the slightest doubt that you may have a problem paying the loan, it would be best not to borrow and find some other means to solve your financial problem.

Using Borrowed Money for Future Profit

Never use borrowed money to purchase personal luxury items. Borrowed money should be considered as a tool to build future profit. For instance Borrowing money to purchase a home or other property would turn out to be a very good investment because the money that you will use to repay the loan would be a lot less from the appreciated value that your will earn from the property that you bought.

It is a fact that consumers today have easy access when it comes to BORROWING money. This is perhaps the reason why people are really not into saving money for a rainy day. Saving money is still the best insurance to protect you from unexpected expenses. Knowing how to save money is also the best way to control and manage your finances and this is so true for wage earners. Applying for loans such as a PAYDAY LOAN is always the easy way out. Applying for a loan should always be the last resort and not the priority when financial problem creeps in. Saving money is simply planning for a bright financial future and individuals can easily do this with just a little patience and discipline.

Availability of Loans

Today loans are easily accessible but getting one is never cheap because it always comes with a premium; and this premium is the interest it carries. Saving money on the other hand will cost you nothing because it is your own money that you keep aside. By saving even just a small percentage of your earnings, you will find that in the long run you would have saved a lot and having that kind of a surplus will ensure that you will not be caught flat footed when an unexpected financial problem arises.

How Do You Start

You can take as little as 10% from your monthly earnings to put in your savings account and this is a good first step in securing your financial future. The key here is discipline. As long as you are consistent in saving this fixed amount, you will soon discover that you have a sizable amount of surplus in your pocket. You can increase the amount of savings when you earn a little extra from overtime work or from other incidental income. Saving money is already a part of controlling your finances so you can now start to plan on how to budget the rest of your income. Being able to balance your income with your expenses is the final step in how to avoid borrowing money.

The continuing lifestyle changes being experienced today seems to be the cause why many individuals are prone to borrow money. Home repair, car upgrade and unexpected expenses such as a medical emergency are just some of the reasons why individuals are forced to borrow money from financial institutions or from a private money lender. But whatever the reason is one must realize that BORROWING money for personal or business reason has its risks that in one way or another may be very disadvantageous to the individual. It is therefore necessary that a person who decides to apply for a fast cash loan should understand what he or she is getting into.

Interest on the Loan

The amount of money that you borrow is the principal amount but it is understood that if you borrow cash commercially the repayment amount will include an interest on the principal amount. Before engaging yourself in a commercial loan, make sure that you have shopped around for the best financial institutions from the list of moneylenders in Singapore or lenders that will offer you the least amount of interest on the loan amount.

Damage to your Credit History

You must realize that every time you borrow money, you would have to strictly adhere and follow to the letter the conditions of the loan. If you don’t or for some reason you were late in remitting your payment, your credibility specifically your CREDIT score can be greatly affected which in turn can cause problem on your future loan transactions.

Loans from Relative and Friends

Loans provided by friends or relatives may seem to be a more suitable way to borrow money. Aside from the fact that the loan may be interest free, repayment schemes can be very flexible. However, money can be a very tricky thing between friends and relative. The risk in borrowing money from friends and relatives is that it may in some way put a strain in the relationship.

Effects on Future Income

Remember that when you borrow money you will have to make sure that you will be able to remit the monthly amortization payment for the loan. This will take a sizable amount from your monthly income until such time that you are able to finally settle the loan.

It is true that money can’t buy everything but the fact still remains that it is one commodity that can an individual afloat in this rat race world. The real problem with money is that if it is not enough, people’s tendency is to borrow to either cover their expense deficit or to simply use for other important purposes. However not knowing how to borrow for the right reason can cause the individual a mountain of financial problems.

“Good Debt” and “Bad Debt”

Remember that every decision an individual makes will either turn out to be good or bad. If decisions are done haphazardly there is a good chance that its outcome will be disadvantageous to the decision maker. In the same way, BORROWING money for the wrong reasons will definitely cause financial problems to the borrower. When an individual borrows money to finance a son’s or daughter’s education, the loan can be termed as a “Good Debt” this is because the proceeds of the loan will turn to be an investment both for the children and their parents. Borrowing to finance the purchase of a house or property is another good example of a good debt. Both examples show that the loan was used as an investment which in the future would turn out to be profitable for the borrowing parties. But if you borrow money to upgrade your car, (even though the old one is running fine) or to cover entertainment expenses or to pay current bills then this will turn out to be bad debts. Always remember to study carefully on the outcome of the loan. Make sure that before you borrow, analyze how long you would have to pay for the loan and compare it to how it will affect the benefits that you may derived from the borrowed money.

Getting the Right Loan for the Right Reason

Using your home or property as Collateral to finance a business venture or to upgrade the capital of an existing business can be a very bad reason to borrow money. Never use an existing asset to fund other ventures such as a small business. If the business collapses you lose both your home and your business.

BORROWING can be a very sound option if the reasons and the need to borrow are right. For instance, unexpected medical expenses, funds for investment and the likes are usually good enough reason for an individual to take on the risk to borrow money. However, there are instances when individuals are faced with the temptation to simply borrow money just for the fun of it not knowing that it can create a very serious financial problem. The following are some of the times that you should never apply for a loan.

Impulse Borrowing

When a person is short on cash and he faces an unexpected financial dilemma it is understandable that he would have no recourse but to apply for a PERSONAL LOAN or any other loan for that matter. But being in a financial bind does not mean that you will jump and accept the offer of the first MONEY LENDER that comes your way. Having a financial crisis is not an excuse for you not to do a financial research on how, when and where to get your loan. In short shop around for the financial institution that can give you the best loan deal.

When You are Offered Pre-Approved Card

Credit card is one of the main causes why individuals file for bankruptcy. Be satisfied with just one credit card or at best with none. Credit cards are temptations for you to purchase anything under the sun but when the time comes for you to pay the bill, you find out you don’t have enough cash to cover the purchases.

Refinancing Loans

Lenders know the people who have sizable loans with various financial institutions. If you are offered to have your loan re-financed, totally reject it. Refinancing your old loans will only lead to padded and increased interests on the loan not to mention the various fees that will be charged to you by the refinancing company. There is nothing bad in Borrowing money to get yourself out of a financial pitfall but financial problem should make you lose track on what your suppose to do when this kind of a problem crops up. Make sure that you will not make hasty judgment when borrowing money from other people.