| | | | Four Questions You Should Ask Before Getting any Type of Loan |
By Candice Pardue 
Should I Go Into Debt?
With so many young American families starting out on their own, debt should be addressed in a more serious manner by our society. Unfortunately, the opposite is occurring.
At every turn, the neon lights are flashing and appear to be shouting, "Get a loan here - it's easy!" or "Sign up for your own GOLD PLATINUM credit card and receive unlimited credit!" Recently, a new and successful (I might add) loan business has formed under the disguise of check advances, which urge you to get your pay on Tuesday instead of Friday. Of course, the company receives a sweet little percentage of your paycheck. Yes, it's tempting when you have bills to pay, groceries to buy, etc. This is where patience is needed, however. Learning to wait is very important in order to make wise decisions concerning finances or any other area of your life.
If grown adults who have been married 30 years can't ignore these temptations of debt, surely young couples who are just starting out are having a difficult time resisting the strong "debt call."
Years ago, young families were encouraged to save their money instead of borrowing. If they wanted to buy a house, they would need to save for years to buy their first home. The same goes for a car or new furniture, etc. The "get it now, pay later" attitude of today has ruined many a young family buy causing unnecessary financial stress.
Does this mean that debt should never occur?
Of course not. We all know that the day we're living in does require a certain amount of debt to function. Mortgages are better than rent, because it's considered an investment when you're purchasing a home. Renting is basically throwing money down the drain. However, young families should still take great precautions before committing to a mortgage. This is a long-term decision that will possibly affect the next 30 years of their lives. It should be carefully planned. It's wise to continue paying rent at least until you know you're ready to commit to a mortgage. Always seek sound advice when making a decision this huge.
Debt can and will occur in the lives of most individuals. That's why the four questions below are so important. These questions will help you determine if taking on a debt should even be considered. If you can answer "yes" to each question, then you can begin considering the loan.
1. Does it make sense to get the loan from an economic point of view?
Ask yourself if getting this debt will add value to your life. A mortgage, for example, will add a valuable asset to your life when paid off or when you have considerable equity. In most cases, real estate appreciates in value over the years.
However, buying a brand new car doesn't make sense in most cases. The reason? A new car worth $23,000 on the lot, diminishes in value by thousands of dollars as soon as it is driven off the lot. You still owe the $23,000 even though the car might only be worth $15,000 the next day! This doesn't really make sense, does it? There's no way to ever regain the value of the car. By the time you pay it off, there's very little value left. If you really NEED to purchase a car, why not find a car that's used and in good shape. You might even be able to pay cash for the car. A nice pre-owned car will meet your needs, and cause less stress later on.
2. Can the needs (or wants) that are being met with this loan be met using any other method?
In many cases, you can find an alternative to getting the loan. Before making your decision, think of other possible solutions. If you're trying to pay off another bill, for instance, perhaps there's an item or two at your home that you can sell. Is the loan going to be placed on a credit card for an impulse purchase such as clothes, shoes, etc.? If so, perhaps you can wait to get the items later when you have the cash. Again, patience is not an easy thing, but it's worth the wait.
3. Do you have peace of mind about getting the loan?
Let your conscience tell you if you're doing the right thing. If you have the slightest doubt, and bright red stop lights are blinking in your head, don't do it. You'll be glad later.
4. Is there unity between you and your spouse about getting the loan?
If there is division between you and your spouse about the loan, don't get it. It will cause even more division every time the payment comes due (usually once a month for X amount of years). Perhaps you feel that the loan is needed, but your spouse doesn't see it the same way. Even if you feel strongly about your cause, it's best to listen to your spouse and join with him or her on their position. No loan is worth losing your marriage. For years now, finances have proven to be one of the major causes of divorce. I am almost certain that burdensome debt is the root of this problem.
These four questions will help you make a correct decision each time you're faced with the dilemma of going into debt.
Remember, don't let salesmen, credit card companies, check advance stations, or anyone else pressure you into debt. Once you've signed on the dotted line, you're "theirs" until the debt is paid - literally!
Please consider every financial decision carefully.
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