The advice often given to young couples starting off in life is “Not to
buy what you cannot afford”. The same basic advice should be heeded by
many. If you cannot afford it- then do not buy the item. But what of
investing in your own future in terms of an investment in your personal
education or training as well as investments in your own personal
career. Is this not getting ahead in life? Is this not money well
spent? Even if you have to borrow and go into debt is this not money
well spent?
If at the end of the day , year or decade you will be much further
ahead in position , salary as well as benefits in addition to “job” and
“personal” satisfaction is this not money, time and effort well spent
and allocated. ? Indeed it is and can well be.
In the case of your education a dollar borrowed now will result in
better jobs- that you will most likely find more challenging and
enjoyable , and have a lot more financial reward than a job on the
status scale – say as a bus driver or a technician doing oil jobs at
your local Wal-Mart. In the case of a vehicle or car loan it may be a
godsend. If your vehicle is not reliable – then how can you show up on
time, keep your job without an image and reputation of reliability? Not
only do you want to keep your employment and income associated with the
job but also the job references from your employment superiors for use
with other employers for better positions and pay, or for promotion
within your present organization. You may even run into a case of
promotion within your present firm to another branch office or plant.
Not having reliable transport may limit your promotion offerings and
flexibility. In addition, if you take out a loan to purchase that
vehicle, you may well have upscaled and upgraded your car or SUV, from
the models that you most likely would have purchased. By doing so, and
driving a higher grade auto model, you may well appear as a more
established, senior, more experienced and established employee as well
as individual. Fortunately or unfortunately in life most comes down to
appearances and perceptions.
There may be a much better and / or better paying job but its way
across town, or in an area not served by the bus transit system. Or it
may be the case that there is bus service - but if devours a good two
to three hours a day of travel time. Good bye to your personal social
life. You may have all the money in the world – the wealth of Bill
Gates Himself and yet no time or energy to enjoy it. So much for all
that pay of that new wonderful job.
A real step foreword as they say. It is always a case of reward
versus cost or cost versus benefit. It is a case by case analysis.
In addition you should think of additional or add on costs. Do not
stretch yourself too thin – financially. A course at university may not
be offered in your calendar year – you will have to complete your
schooling fully at a later date than expected. A course may be full –
ditto for time delay. Or you may even have to repeat a course or change
plans along the way necessitating longer time duration of studies.
Leave a buffer of funding both for yourself and as well with the agency
that provided the loan – be at bank, savings and loan, credit union or
even parents or relatives. Don’t break the bank so to speak at the
first step. The same analysis of benefit versus costs prevails in the
car / transport / job scenario situation. Many people will drive across
town for a bargain to save a dollar and spend $ 10 on gas costs in the
process. Incorporate the price of gas into your final net salary not as
an aside.
Lastly and most importantly – always pay your bills. Never take on
more than you can chew, or in this case afford. Before making that
commitment for a loan or undertaking always evaluate carefully before
signing on the bottom line. It’s not only a matter of convenience. Your
credibility itself is on the line, in addition to your personal honor
and integrity and reputation. Pay your bills on time – even earlier
than required. This applies to all loans – whether they are for rent,
mortgage, utility bills, bank loans, charge card payments or student
loans. If you cannot pay in full, then at least pay a bit above the
minimum payment. If you are really stuck then contact the lender.
Explain the situation honestly. Make a commitment and follow through.
Remember the whole point of the exercise was your self improvement – an
investment in yourself. To not take the exercise seriously is to
shortchange yourself and your future opportunities as well as income
stream in the future. To borrow for yourself and personal gain make
prudent sense.
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