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BORROWING
BASICS
Before borrowing money, make sure you
can manage debts.
Remember that you want to own more
than you owe.
You want to build wealth. If you borrow
money, you should use it to make more
money.
Try not to pay for things that will not
create value for you. Also, never use
short-term loans, such as credit cards or
overdrafts, to fund long-term assets like
houses.
LOANS AND CREDIT
When you want to take a loan or use a credit card,
ask
yourself these questions:
Is the product or service you want to buy important?
Is it necessary?
If it is important and you need to have it, can you
afford to pay the installments?
If it is a substantial purchase, such as a car or house,
can you afford to put down a larger down payment?
If it is something you desire, can you control the feeling
and delay your decision to buy it since it is not that
important?
If you decide to take a loan or use your credit card to
buy something, have you worked out your cash flow to
see if you are able to repay the money you borrowed?
Do you know the costs of borrowing and using your
credit card? There are interest rate costs as well as
finance
charges such as late payment fees.
Do you understand the consequences of failing to
repay
money you borrow? If you fail to do so, legal
proceedings can be taken against you. You can even be
made a bankrupt.
Hence, it is important not to
overcommit
on loans and purchases using credit
card.