When is it pretty much always a bad idea to borrow money?

NEW YORK (Main Street) – The average American household in debt has over $ 15,000 in credit card debt as of June 2015. The total shared debt of all Americans is over $ 11 trillion, up 1.7 trillion dollars % compared to last year. With so much debt, it’s important to be careful before adding new debt to your share of the burden. And there are definitely times when it’s right never a good idea to get into more debt. So when you absolutely, positively should never To borrow money?

When you can’t pay it back

Don’t borrow money that you can’t pay back. Sounds obvious, right? But Mike Sullivan, director of education at Take Charge America, points out that it’s not as obvious as you might think. “If you’re already cash-poor and can’t make your payments, borrowing more money could be a disaster,” he says. He advises people not to borrow money unless they can budget that shows how they are going to pay it back. “If you can’t do that, you’re headed for financial disaster,” he says.

To maintain a lifestyle

“Borrowing to maintain a lifestyle is the most inappropriate reason of all,” says Sullivan. He says there are a lot of people who have borrowed a lot of money. When he asks why, they often reply that it was the only way out. It is the very definition of borrowing money to maintain a lifestyle. More … than credit card debt, Sullivan suggests that this is a great way to get caught up in the cycle of payday loans and other high interest loan products. You really can’t afford the lifestyle you lead and you use credit and other forms of debt to artificially boost your income.

To please yourself or for others

Another common reason people go into deep debt, Sullivan said, is because they are indulging themselves – or others. “If you just have to ‘have something’ you don’t have money for, it’s borrowing for the wrong reasons,” Sullivan explains. Often times, people borrow money against their future income because they feel they deserve to have some fun. However, this is a costly mistake that often puts the borrower in a cycle of debt that they cannot repay. Then they end up making the mistake from the previous section: borrowing money to maintain a lifestyle. Indeed, it is difficult to see where the last point ends and this one begins.

When conditions are unfavorable

John Heath, attorney general for LexingtonLaw, believes that no one needs the money so badly that they should agree to unfavorable terms. “You should never borrow money if you are in the position of being held over a barrel,” he says. Outrageous interest is just one example of unfavorable conditions. Heath also suggests that potential borrowers take a look at what happens in the event of a default. “Is the interest rate go from high to outrageous? ”he asks. He says it’s important to always look at the fine print and, if you don’t understand it, find someone who can explain it to you. putting you at a great disadvantage, ”he says.

When you are emotionally vulnerable

Heath says when you’re emotionally vulnerable you don’t make good decisions – and that applies doubly to money. “When people are under extreme stress or are just coming out of emotional trauma, it’s usually a bad idea to borrow money,” says Heath. But, it is not uncommon for people to borrow money right after a divorce or family death. While you might need the cash, there might be better ways to get it than borrowing from a commercial lender. And the more you can defer borrowing until you’re in a better state of mind, the better your finances will be in the long run.

If you are worried about bankruptcy

Sullivan notes that “the courts and judges are very upset if you borrow a lot of money and then file for bankruptcy.” If you have any concerns about the possibility of filing a return in the near future, “you have to be very careful about borrowing money,” says Sullivan. At best, the judge will refuse to pay off the new debt. In the worst case scenario, you could be suspected of bankruptcy fraud, which is a serious felony.

The bottom line is that when it comes to borrowing money, there are more times when it is probably not a good idea that the times he is a good idea. Be careful and only borrow money when you absolutely need to or when buying a home. And when you borrow money, make sure you get a great deal. Otherwise, you only make a bad situation worse.

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