Making the Most of Your Money Part 5- Borrow

There are five principles, which we will call building blocks, you need to know to make the most of your money.  The blocks represent the key principles to keep in mind as you make day-to-day decisions and plan your financial goals.  In this post, I will review the fourth block, Borrow.  1  2

Borrow

Sometimes it is necessary to borrow for major purchases like an education, a car, a house, or maybe even to meet unexpected expenses. Your ability to get a loan depends on your credit history, and that depends largely on your track record at repaying what you have borrowed in the past and paying your bills on time.  So, be careful to keep your credit history strong.

Actions You Can Take

  • Track your borrowing habits.
  • Pay your bills on time.
  • When you need to borrow, be sure to plan, understand and shop around for a loan with a low Annual Percentage Rate (APR).
  • Learn about credit and how to use it effectively.
  • Pay attention to your credit history, as reflected by your credit score and on your credit report.

Hints and Tips

  • Borrowing money is a way to purchase something now and pay for it over time. However, you usually pay “interest” when you borrow money. The longer you take to pay back the money you borrowed, the more you will pay in interest.
  • It pays to shop around to get the best deal on a loan. Compare loan terms from several lenders, and it is okay to negotiate the terms.
  • When repaying a loan, it may be better to pay more than the minimum amount due each month, so you will have to pay less in interest over the life of the loan.
  • One of your most important aids when shopping for a loan is the APR – the Annual Percentage Rate. This is the total cost, including interest charges and fees, described as a yearly rate.
  • Paying your bills on time will help increase your credit score. Even if you fell into trouble with borrowing in the past, you can get on solid footing and rebuild your credit history by making regular payments as agreed.
  • You are entitled to a free copy of your credit report every 12 months from each of the three nationwide credit bureaus. Go to AnnualCreditReport.com or call toll-free 1-877-322-8228 to order the free reports. Beware of imposter sites.

The next building block is “Spend.”  Don’t wait, go to the blog post now.


Spotlight Resources

Consumer Information: Credit and Loans

Free Credit Reports

Consumer’s Guide to Credit Cards

 

 

###Larry Marvin
LifeCrafter – Money $ense

  1. ©2017 Larry Marvin, Image Credit:15948082584_c91d1c8d13_k.jpg
  2. My Money Five, https://www.mymoney.gov/mymoneyfive/Pages/mymoneyfive.aspxThe Five Principles