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Posted by on Jan 23, 2015 in Debt, Loans, Tips |

Do You Need To Borrow To Live?

Do You Need To Borrow To Live?

Over the course of your life, you will spend, save and borrow money. Not just a few bucks, but hundreds of thousands. Money really does make your world go around, because it is hard to live in the Western world without it. You can’t possibly grow all your own food, or generate all the power you will need to consume over your lifetime. Education, healthcare, and even flushing the toilet will cost you money at some point in your life.

It isn’t a topic we have traditionally been frank, honest and communicative about in the first. This is cultural, and it has historically been quite damaging. People who have debts still live in shame at the problems they have caused and how it prevents them living the lifestyle they want. We are often raised believing we can go out there, forge our own paths and make our own wealth. Signs of success are still made of material things like sports cars and big houses.

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This photo originated from Flickr

The trouble is, image is now a big part of money. Lots of people feel like they need to look successful and to do that requires lots of money being spent. Branded clothes, cars, jewelry and gadgets are still used to portray success and wealth. This can lead us naively into spending what we don’t yet have. Borrowing money, to appear like we already have cash of our own, can be a dangerous thing to do.

If you could calculate your life’s debt, you may be shocked at the figures. There are ways to reduce the figure. Living within your means is all it takes. You only spend what you have in your pocket. Sounds simple, right? Wrong. For most of us, it is impossible to do. Cashflow is tough, especially when we are just starting out. Often, we need financial support from our parents. Living alone on an average wage is considered unaffordable. Meeting the cost of living cannot be done on a minimum wage alone. This is why people start to borrow.

Getting a credit card or loan to cover everyday bills is bad enough. Sometimes we see something we really want. You may convince yourself you can’t live without it, or just turn a blind eye to the expense. Borrowing money makes a 100 buck item cost substantially more. In most cases, it means what you get isn’t worth the money you paid for it. One exception to this could be buying a house. Over the course of a mortgage, you will pay back about three times the money you borrowed. It is hoped the house value will increase over the life of the loan to equal or better that borrowed amount.

If you must borrow, try to pay it back as soon as possible. Just paying the interest will never clear your debt. Saving pays you interest, so if you can clear your debts try to get a high-interest savings account. Living frugally and living without can be tough, boring and depressing. But being debt free really does keep a nasty weight off your shoulders.

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