canstockphoto9530353Whether you are taking a trip to the mall or looking to buy a new home, the first thing that may come to mind is to use your credit card or obtain a loan. Many consumers are choosing to put things on credit simply because it’s a convenient way to shop. Borrowing Money has its  benefits as well as risk. The number one question you may want to ask yourself is will borrowing money put you in danger of getting in debt?

 

Excessive borrowing is becoming an epidemic in our society and it seems to be no big deal to a lot of people. It’s easy to just go in our wallet and reach for the credit card or what some people affectionate refer to it as “the plastic.” Some people get a high when charging things on their credit cards that they can’t afford.

 

If you fall into this category you are falling into a trap of getting yourself head above water in debt. For example, if you are purchasing a new sweater and you are using your credit card that has a 20% interest rate this will get quite expensive over time. Many people make the mistake of looking at the original price tag when making their purchases. When they receive the bill they are surprised how much they are paying for that item.

Many people also fall into the credit card trap by making the minimum payments on their bill each month. The credit card companies allow their customers to pay a small amount of money to keep them  paying on the debt for a long time. That’s how the card companies are making  big profits.

Imagine how much you will be paying if you made most or all of your purchases on credit. Even if you pay your credit card bill on time every month you are losing out on the possibility of building your own wealth. The amount of money you are paying in interest charges can be making you money if you stop being a borrower and become an investor. It could be put to better use in an interest bearing account instead of going to the credit card company.

 

What about getting a loan to buy a new home?

There is nothing wrong with taking out a mortgage to buy a home. This is a necessity for most people. It’s actually an investment because in most cases a home will gain value over time. However, you have to be careful not to give into the temptation of buying a bigger house than you can afford. You should ensure that your mortgage payments is well within your family’s budget.

 

Are you borrowing money that you can’t afford?

If you have a habit of making purchases on credit, you will be putting yourself in a hole financially. Take a good hard look at your buying and borrowing habits. Pay the maximum amount of money that you can on your monthly bill so you can pay off your debts as quickly as possible. Once you pay it off, put it to good use by investing in your children’s college fund and for your retirement to build a bright future for your family a lot sooner than you think.

 

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