6 reasons why you shouldn’t take out a loan

A loan is when you have no money. But you live as if you have them. Folk wisdom

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People are not inclined to delay gratification. What’s better – a sweet cake today or two equally sweet cakes tomorrow? Most will choose today. We do not like to postpone consumption, save, worrying about tomorrow, limiting ourselves today.

Credit comes to the rescue. Today, without having the means to do so, we increase consumption at the expense of future income. With the help of a loan, the borrower receives additional opportunities today, but reduces his opportunities tomorrow. After all, the loan will be repaid using future income. Credit is a kind of time machine that transfers consumption from the future to the present. And the interest on the loan is an obvious, but not the most significant payment for such a journey through time.

We are becoming richer, getting additional opportunities today. But it is not the bank that gives us this. We take wealth from ourselves, from our future.

So, through a loan, we increase opportunities today, but reduce our opportunities tomorrow.

Receiving a loan means not only the beginning of a new stage, but also determines the life of the borrower for years to come. After all, long-term loans are repaid in multiples and the need for constant income turns into an urgent need. An apartment in collateral can make it difficult or impossible to move to another city. This is not the time to think about rest or changing your hateful job. The borrower has been stuck with the sword of Damocles for years under loan obligations. After all, with a large amount of loan payments, even a slight change in the economic situation can lead to devastating consequences. 

You should not take out a loan:

• for something you can’t afford;
  
• if you are not firmly convinced that the purchase is necessary;
  
• if loan payments will significantly reduce future income;
  
• if there is a risk of non-fulfillment of loan obligations due to the loss of a source of income;
  
• if it is impossible to pay off without resorting to a new one loan;
  
• if, in order to repay debts, you have to work “on credit” all your life.
  

Before making a decision on lending, it would be good to look at the situation with your own eyes from the future.. Take out a loan for a luxury holiday? But after/in the event of an unsuccessful vacation, repaying the debt for months, reproaching yourself for your indiscretion? Maybe this money could be used more wisely? A mistake, including a financial one, can be corrected. But a system of rash decisions leads to financial dependence with all the ensuing consequences.