The ease of obtaining credit, whether through loans or credit cards, is ridiculously easy for the majority of people. Given the damage caused in 2008 because of easy access to mortgages and loans, the fact that credit is still so readily available is more than just a little worrying.
Daily, we are bombarded with messages about products and services which will improve and enhance our lives. We see fairytale lives being lived out, picture by picture, over social media and feel pressured to keep up. All of this costs money, and even if we don’t have it readily available, credit cards and loans can easily be had.
If you are smart and shop about, credit cards can be found which offer 0% interest on purchases and balance transfers over periods of up to 36 months. The problem is that these offers are dependent on your credit rating, so those eligible for the best deals tend to be those who can use and manage credit cards responsibly.
For those who fall short of the criteria for the best deals, there are a growing number of vultures, cleverly disguised as Loans Companies, circling. These companies offer loans of up to £1500 at interest rates of over 1000%. Just let that sink in. OVER 1000%. Pure greed. People often skim over the small print and rush to get their hands on these loans without a thought for the future and what the repayments of a loan with interest that criminally high would look like. It is true that people can sometimes find themselves in very difficult circumstances, desperately needing the money for home repairs or to help with rent payments. More often than not though, people wrongly see these loans as easily available money, and end up spending it on things that they don’t need just so that they can post pretty pictures on Instagram.
Debt is often described as modern-day slavery. I hate this phrase. It really is horrible, but there is no denying that debt is a form of entrapment. Debt keeps us in steady jobs which pay a wage but offer very little challenge and stifle our creativity. We find ourselves relying heavily on our paycheck to pay not only our bills, but also repay our credit cards and loans. As such, our dreams are shelved because we can’t afford to take a risk and chase them.
That is not to say that all debt is bad. If you are launching a side business or are looking to turn an existing side business into a full-time venture, debt can be a necessary evil. Depending on the nature of your business, you may need to borrow money to secure a premises from which to operate and all of the necessary equipment you will need. Obviously, the more money your side business has already generated, or the more you have already set aside for your venture, the less you will need to borrow and the more freedom you will have. Those critical first few months in which you fight to establish yourself, the pressure is somewhat lessened if you’ve borrowed less from the bank and thus have lower repayments to meet at the end of every month.
Christmas is an expensive time of year, no doubt about it, and is usually followed by New Year’s resolutions to quit jobs and launch businesses instead. I would ask that you be careful and do your homework before you borrow a single penny. Ask yourself;
- What do you need the money for? Is it absolutely necessary? If you are launching a business venture, is it feasible? Can you realistically make it work?
- Have you read the small print about interest rates and repayments? Do you understand the contract and agreement which you are entering into? If not, DON’T DO IT!!
- Can you afford to meet the repayments with your finances in their current state? Or will it put a strain on you?
Think carefully before borrowing money. Do your homework and figure out whether you really need it. It is far better to go without some luxury items which you don’t actually need, and retain your freedom to change jobs, set up a business or exercise your creativity, than to find yourself trapped in your current role in order to meet your financial commitments