Borrowing Basics
Only very few people can pay for everything they need with a lump sum from their savings. But many more people can afford those purchases when they include borrowing as part of a sound financial plan. They take a loan to buy a home or a car or pay for a college education. They use a credit card to make smaller purchases, such as a washer and dryer, bedroom furniture or new winter coats for their children. Timely repayment of what they borrow strengthens their ability to borrow again in the future.
Borrowing responsibly means asking three questions before taking on additional debt:
- Is the product or service necessary?
- Is there a way to afford this purchase without borrowing money?
- If borrowing money is the only way to afford the purchase, am I getting the best deal, including the lowest rate and the lowest fees?
In the Spotlight
Financial fitness is as important as physical fitness.
