Save, don't borrow.

opinions4u

I posted this on the Loans board earlier in the week. It was well received, so I think it may be worth reproducing it here as well - apologies to those who have already read it.


Christmas comes but once a year. And most of us spend more in December on presents, parties, travel and the rest of it.

We know it's going to happen. Most of us enjoy it too.

But reading the Loans part of this forum in recent weeks is something I find pretty stressful.

"Pay Day Loans Problem"

"Freezing Interest With Wonga"

"Pay Day Loan For Student"

"Log Book Loans"

"In Need Of A Loan – Very Bad Credit"

In need of a loan? Really? Surely it is a choice to take a loan out. Surely nobody wants a loan; it is a means to an end. Very bad credit? Perhaps learning from previous borrowing mistakes would be a good idea then!

If you find yourself in a position where you are taking a loan out for anything that happens every year, or more often, you have a problem.

Borrowing £300 to get you through to pay day strikes me as a fairly obvious sign of distress in your finances. Be it increasing your overdraft or using a payday loan company, or even thinking of using a payday loan company is a message telling you to sort out your finances. You've started to spend more than you earn.

As for taking out a loan to pay for Christmas, !!!!!!! It happens annually. You know it's going to happen. You can plan for it. It’s not too late to open a regular saver account now that will give you a lump sum for Christmas 2011. No interest to pay at 2689%. But earn a couple of quid back for yourself instead.

You know when your car insurance is due – set money aside for it each payday instead of being shocked when the bill arrives. And don't pay it monthly at 25% APR. You know that one day your TV will pack in, the washing machine will sound more like a racing car and need replacing or a tile will fall off the roof of your house. If the fridge has had 4 inches of ice stuck to the back of it then anticipate its demise and start setting money aside for the inevitable.

A normal family holiday does not need to be paid for with a loan or a credit card. If you go away once a year, why pay interest on a loan when you can save for it?

If you're young and don't have to worry about more than the iPhone bill and the next night out, yet you find yourself thinking about taking out a payday loan (or an overdraft) please treat this as a moment of truth in your life. You have no commitments, yet you are borrowing because you are spending more than you earn. This really is madness. My own experience of life was that I had my highest disposable income at age 21. No house, no kids, no wife, living with parents. You really don't need to borrow for anything – you have a better opportunity to save now than any other time in the next 25 years. Take it. Fill your boots. Still enjoy life, but don't get in to debt when you don't have to.

Save. Don't borrow. Plan your finances and budget carefully. You will make your life so much easier.

Merry Christmas.

jen245

Couldnt agree more! Merry Christmas!

viv0147

Well said I save now for everything I only wish I had done so when younger

Degenerate

My only reaction to that is that it sounds like the musings of someone who has never actually been on the breadline, and so cannot really appreciate the pressures that lead people into the debt trap.

To take out a loan may be a choice, but a how much of a foolish choice depends what the other options were at the time.

CLAPTON

Degenerate wrote: »

My only reaction to that is that it sounds like the musings of someone who has never actually been on the breadline, and so cannot really appreciate the pressures that lead people into the debt trap.

To take out a loan may be a choice, but a how much of a foolish choice depends what the other options were at the time.

maybe so
and obviously there are exceptions to all rules of thumb
but how can people on the breadline that can't afford to save, then afford to make the repayments with lots of interest in addition?

Degenerate

CLAPTON wrote: »

maybe so
and obviously there are exceptions to all rules of thumb
but how can people on the breadline that can't afford to save, then afford to make the repayments with lots of interest in addition?

Things like "How can I live without a fridge to keep my food in?" tend to override such concerns.

opinions4u

Degenerate wrote: »

My only reaction to that is that it sounds like the musings of someone who has never actually been on the breadline, and so cannot really appreciate the pressures that lead people into the debt trap.

The post is not in any way aimed at people on the breadline. It's asking people to identify the triggers in their financial behaviours that could lead them in to severe trouble. Hence the specific reference to younger people with high disposable incomes running up silly debts.

I can certainly say that my financial situation just 10 years ago was significantly less healthy than it is now. Single income, three young children and, after paying the bills and feeding the clan, £7 a week left for "miscellaneous".

As a family, we had to be financially disciplined to ensure that we didn't overdraw or run up debts on credit cards etc and we had to avoid the temptations of "keeping up with the Jones's" as good friends moved in to nicer homes in nicer areas.

But no, we weren't starving. The sacrifices were no meals out, no holidays, no football matches. So while I would never claim to have lived on the poverty line, I think it's fairly safe to say that I understand the triggers that, for some, turn a difficult financial position in to a disasterous one. Two years of managing a team of mortgage arrears counsellors and signing off payment arrangements also helped me to understand the differences between downright stuipd and genuinely unlucky - and the various degrees of risk between those two points.

But point taken.

CLAPTON

Degenerate wrote: »

Things like "How can I live without a fridge to keep my food in?" tend to override such concerns.

freecycle ........

redcard

It's kinda like saying "stop eating cakes" to a fat person.

missile

Degenerate wrote: »

Things like "How can I live without a fridge to keep my food in?" tend to override such concerns.

My grandma never had a fridge. :A

If you posted how can I live without money to buy the food :T

bengal-stripe

redcard wrote: »

It's kinda like saying "stop eating cakes" to a fat person.

What's wrong with that? - They might not take your advice; nevertheless, it's good advice.