by Zac Majors
Personal Loan – Can it Make or Break Your Lifestyle?
The COVID-19 pandemic and its aftermath has left many individuals struggling to cover expenses. The rate of inflation is on the rise, purchasing powers have declined, and most importantly, people are actually earning less than they used to. In times like these, a personal loan can seem to be a rather viable escape, albeit temporary.
Whether it’s for home improvement and maintenance or simply to make ends meet, the first thing you should consider before taking a loan is whether it will make or break your lifestyle – now and for the future. We suggest that it is best to avoid personal loans at all costs. Here, we will consider some impacts personal loans can have on your lifestyle.
Personal Loans – Spending More Than You Have
Simply trying to make ends meet is one thing; however, having more expendable cash on your hands is nothing short of a temptation to spend more. Let’s take credit cards, for example. A study shows that people spend more with credit cards than if they have to spend from their own pocket. You don’t feel the pain of spending until you have to return the amount owed.
Interests - The Bane of Repaying Personal Loans
If you have already taken a loan, we suggest that you should always at least make minimum payments. Doing so will allow you to avoid penalties. Better yet is to pay off the balance in full every month so you can avoid high interest charges.
Interest on debt can ruin your lifestyle, so make sure you choose a provider that offers rates you can afford.
Getting Into Debt & Ruining Future Prospects
Whenever you borrow money, you create a debt on yourself. Think of it as kind of like digging a hole and standing inside it. The deeper you go, the more problems you will have getting out. One of the biggest issues debts present is that they reduce your future expendable income, thus worsening your overall condition in the long run.
There is also the retirement planning aspect to consider. Low expendable income means you aren’t left with that many options in terms of what you can save for retirement. Accomplishing financial goals becomes much harder than it needs to be.
Personal loans may offer short term relief but long-term can have a negative, lasting impact. If you are looking to take out a personal loan and are confused about whether it’s a good idea or not, feel free to give our advisors a call. We can help you evaluate your current financial position and try to find a solution for your predicament.
If there is no other option, our financial advisors can help you find favorable personal loan terms to minimize the damage it causes to your future lifestyle.