I need a loan

Is that a fact? Do you REALLY need a loan or should the question your asking be ‘I would like a loan?’. I don’t know what your circumstances are and you may really need a loan, but in a vast majority of case people would merely like a loan to do X Y Z with that will bring them no money back.

It’s the mindset of being able to get hold of easy money that has led to the poor financial state of the world an a consumerist society. Thirty or forty years ago getting credit was a difficult task, banks and building societies were reluctant to hand cash out to anybody who they thought would struggle to pay it back. Although it may not seem like it this actual did those people a favour.

The people that couldn’t get their hands on some cash realized that the only way they were going to get some money was by saving. In order to get some savings they had to do one simple thing:

They had to make sure that they were bringing in more money than they were spending each month.

Sounds simple doesn’t it but I know that it is a difficult to place to get to. Bringing in more money than your are spending out each month is the first step to financial freedom – being able to do what you really want. I don’t believe that money brings you happiness but having your own money does bring you freedom – freedom to work when you want, freedom to do the activities you want and freedom to live where you want.

Next time you utter those words – I need a loan – just ask yourself do I really, do I have enough money to cover the payments, is whatever you are going to buy going to be worth that extra $400 a month out going? Think of it like this if you get paid $10 an hour – you’ve got to work a whole week, and some including taxes, to pay for that loan a month – is it worth it?

I’ve made out so far that getting a loan is a bad move, but there are some situations where getting a loan can be a wise choice. The right sort of home improvements can add thousands on to the price of your home, so if you’re thinking of moving home you may want to look at extending or improving before you do. A 10K loan may add 15K on to the value of your home. It’s simple to see that in this case getting out a loan would be a good decision. Once you’ve moved you pay back the loan and you’ve got almost 5K left in your pocket or you’ve bought a house 5K more than you could have done without getting the loan. Before you do this make sure you’ve took the advice of a local property agent – after all it’s on their interest to sell your home for as much as they can.

If you are looking for a short tem loan make sure you do your math before hand. Not many but some loans have no early repayment charges so you can pay it off without a fee, others you may have to be a couple of months interest as a penalty charge. If the no repayment fee loan has a higher APR than that loan that has a repayment fee there may be a point where the repayment fee is less than the interest charged on the no repayment fee type loan. Be smart, keep hold of as much money to yourself as you can, It may only be a few bucks but if you go though your life like this those few buck will add up.

If you really do need a loan, make sure you have explored all other options before getting one. Here are a few things you could do to get some extra cash instead of getting a loan:

• Rent out a room
• Sell your old stuff on eBay
• Buy and sell stuff on eBay / Amazon.
• Sell your car and use public transport
• Make and sell things
• Depending on what you want to do with the cash are there grants available.
• Borrow the money from a family member

The last one really would be my last resort, from a self esteem point of view it will make you feel better about your self if you know you’ve done it by your self.

Think seriously about the long term prospects before getting out a loan.