You can’t get through life without borrowing money or applying for credit in some circumstances.
Not in this life.
I get it. I really do.
You can’t get a mortgage, car, apartment, or facilitate large purchase transactions without a good credit history or a loan.
Most of us ask for loans from friends or relatives who are financially responsible.
Or, ask them to cosign loans.
I just think its emotionally and mentally self-defeating to ask for money instead of earning it.
Believe me, I am speaking from experience. I am not just trying to be annoyingly preachy.
Unless you apply for a loan in circumstances where you have enough savings, or property, to fully or partially collateralize the loan yourself, you’re creating a self-perpetuating a debt-cycling existence.
Asking for money or loans creates a financially entitled mindset. Instead of trying to earn money, its just easier to ask when it’s convenient.
This creates the debt-cycle mindset.
As in, “I will pay for this later or whenever.”
Or, pay for it never. If you are fortunate to get a loan from a friend or relative, you’ll just get into the mindset that you don’t have to pay it back.
Then, when you run out of money, the debt-cycle mindset, which is entitlement enabling since this is the only way to get money, remember, makes you borrow more money to replenish exhausted funds.
When I was a young man, I earned my money. I had a few credit cards.
But when I got married and my first apartment, I used credit cards to pay bill and applied for more credit cards when needed.
I borrowed money from everyone I knew. There are many I haven’t paid back to this day.
Somewhere along the way, I lost the appreciation of earning my own money. I lost a financially responsible mindset that I know I possessed before I realized just asking for money was easier.
It’s only been in recent years that I’ve started to get my personal life back on track.
I’ve haven’t owned a credit card in over a decade.
A Loan is a 4-Letter Word for People Who Can’t Afford Them
I am not saying that you should never apply for a credit card or a loan.
What I am saying is that you should perfect your own understanding of, “personal finance,” before applying for a mortgage, loan, or credit card.
One thing I regret is not saving more money earlier in life.
Then, I would not have been so dependent, entitled, or so reliant on financial help from friends, relatives, and credit cards.
If I had started saving money as teen, when I started my first job, even at a few bucks a week, I could have collateralized my own business loan years or decades later.
Or mortgage.
Car loan.
You get the idea.
A powerful personal finance mindset will help you handle loans more responsibly and pay them off sooner.
And more important, understand the distinction of applying for a loan when you need one instead of wanting one because you just want something.
I’d give anything to go back in time.
But I can’t.
So, I implore young people, young families starting out in life, and middle-aged people starting over – save money.
Only think about loans when you can pay for them on your own terms.
Until then, consider a loan the new 4-letter word.
Read More
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.