Borrowing Money The Smart Way

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As much as we all try to avoid loans or borrowing in general, sometimes it’s an unavoidable necessity. The thought of borrowing money and having the thought of that debt looming above your head does not, however, have to be quite so worrisome, if you’re prepared for the situation.


Always plan ahead.

This sounds like an obvious piece of advice, but you’d be surprised how many people in debt only ended up there because they lost track of how much they were borrowing.


It’s easy to tell yourself that you don’t have enough disposable income this month, so you might as well take out a small loan to fund that nice holiday away, or the new kitchen you’ve been craving for a long time. However, if you didn’t have enough disposable income for that purchase this month, then it’s going to be quite a few months’ worth of repayments before that debt goes away; that one “small” debt. As soon as you’ve done this multiple times, the money adds up quickly.


Plan ahead, and think about how much disposable income you make each month. If you need to borrow money to pay for some major, ensure that you can devote all your disposable income to that debt well within the time limit for repayment. If you’ve planned ahead, taking into account your monthly income, you should never feel constrained by deadlines.

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What to do when you’ve borrowed from multiple lenders.

Whilst it helps to pay off one debt before incurring another, you might find that, sometimes, you you become forced into paying off more than one debt at a time. This can happen in the case of student loans, for example, which you might have to pay on top of home repayments, or any other loans you’ve taken out over the years.


In such a case, it can be a wise idea to consolidate your debts. You’ve probably heard this term, and this piece of advice, numerous times elsewhere. There’s good reason for that, of course. Combining all your debts into one easy, manageable repayment means that you’ll just have one bill at the end of the month, so you can organise your finances around that.


The scariest part of borrowing can be maintaining a good credit score.

If you mess up on a repayment, your biggest fear might be the effect this has on your credit rating. Of course, you don’t have to let this worry you, as you could consider options such as an instant credit builder account, which would improve your rating whilst saving your money. This is a brilliant way to stop worrying about your credit score, and start building towards a sensible debt solution.

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Alternative routes.

Instead of risking repossessions, should you be unable to pay a debt, you might want to consider a personal loan instead. You’ll never have to fear losing your property, your position at work, or other business assets in which you have invested. Of course, whilst you won’t have to deal with awkward questions when you ask for a loan, you might end up in a tricky situation if you can’t repay it, as there will be no collateral.


The key to borrowing money the smart way, then, is to only borrow what you can afford. If you need to borrow £100 today, ensure that, given your disposable income over coming weeks, you’ll be able to pay off that £100 before the deadline your lender has given.

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