There was a time when the only way to acquire goods or services was to pay for them with cash on hand. If you did not have the cash, you did not get the good or service. There were no exceptions to this rule. Part of the value system in this country was that you never borrow money. “Neither a borrower, nor a lender, be. Do not forget. Stay out of debt” are words that still ring true to some in our society even today.
But for most people in our society, those words hold no meaning whatsoever. Ours is a system based on credit, not gold. For many purchases, the assumption is that some form of credit will be used. When buying a car, you would be looked upon with suspicion if you dropped $25,000 in cash. When it comes to establishing your trustworthiness, having lots of money is less important than having a high credit rating.
America is rather schizophrenic when it comes to the subject of borrowing money. We live in a credit society. Yet we feel queasy about seeking a loan. Credit councilors advise us to get out of debt and cut up our credit cards. We are advised never to borrow from, or lend to family and friends. With so many mixed messages, it is difficult to know what to think. We find ourselves afraid to get a loan when we should, and all too eager to get a loan when we shouldn’t. Here are a few ways to know when the time is right to take out a loan:
When There Is Absolutely No Other Way
There are times when you may really need a loan. You want to make sure nothing is standing in your way when that time comes. If your credit is less than perfect, you have to be very careful about what sources of credit you apply for. It is not the amount you borrow that gets you, but the interest. To avoid the high interest rates of most emergency lenders, you will want to pay off the loan right away. Emergency loans are not like credit cards. You don’t want to carry a balance any longer than you absolutely have to.
The upside to these types of loans is that you can usually apply online from anywhere in the world, and get the money by the next business day. Emergency lender, Blue Trust Loans is an example of a company with a simple online application process, and a fast turnaround for money in your bank account. You should run the numbers for yourself at BlueTrustLoans.com to see if this sort of loan is right for you. These types of loans can be real life-savers in a pinch.
When Starting a Business
Even wealthy people get loans when they get ready to start a new business. Few businesses are expected to actually make any money for the business owner for quite some time. It can take several years before any profits are realized. Pride has no place in this transaction. If you want your business to succeed, shamelessly borrow.
When the Risk of Not Borrowing Is Too High
It doesn’t make sense to put your family in jeopardy when there is another alternative. Many inventors and entrepreneurs believe in their product so much, they are willing to mortgage their home to secure the funds. But that is far too dangerous. Businesses fail all the time. It is the rare business that makes it past the first five years. With your house triple mortgaged, where will your family be when the bill comes due?
In the political arena, we used to talk about balancing the budget, as if that were the ultimate fiscal goal. But like families, governments run on credit. We should not be afraid of sensible borrowing. Only the foolish kind should keep us up at night.