- The Three bs
- Budget Aids
- Two Motivations for Buying
- Buyer's Homework
- Shopping Prices
- Negotiating a Better Deal
- Common Sense Borrowing
- The Bonus "B"
- Big Hat No Cattle
- Ask for Free Stuff!
- The Debt Book
Common Sense Borrowing
Borrowing is one of the foundations of the American economy. It’s what drives commerce and allows businesses to grow past the limits of their net worth.
The fundamentals of borrowing are: Credit Worthiness; Types of Loans; Loan Amount; Collateral; Loan Restrictions and Limitations; Loan Application; and Standards of Application Evaluation. These fundamentals need little to no explanation. What does need to be explained is what comes before these fundamentals.
The Common Sense of Borrowing is to understand you are not so much Borrowing Money as you are Buying Risk.
Before you look at your credit worthiness, types of loans, how much you want to borrow, the limitations you face, the application you must fill out, and the standards your application will have to meet, you need to ask yourself if you can afford the risk? Ask yourself if there is a better way to get what you need than to borrow money for it?
Buying Risk Let’s say you need a car. You are thinking of getting a loan either for a new car or a used car. Let’s say you have some money saved. Before you consider the details of a loan first ask yourself about the Risk. What can you afford to add to your monthly payments that will not send you into dire straights if you encounter an emergency?
You avoid Risk when you can pay cash. Yes, paying cash can seem impossible. But with smart budgeting and a willingness to set aside pride you can often get by without loans. Or you can at least lessen the amount you think you need to borrow. In the case of your need for a car you may be able to buy a cheap beater for cash and save toward a more reliable car six months on. There is always an option.