The role of debt in our finances - Most common mistakes

josevas217 (79)modin Project HOPE • 3 months ago

Hello friends of Project HOPE, I hope you are feeling very well, and that your week is progressing in a very good way. Today I would like to discuss a topic that may have different views depending on the person who raises it, it may be good or bad, but surely we all have a position on this, I am referring to debt as a financial instrument.

Obviously, nowadays, acquiring debt is a fairly common practice, whether to finance the purchase of a house, a car, to pay for education or even to cover unforeseen expenses. However, we must always be very careful, since acquiring debt irresponsibly can lead us to complicated financial situations.

Therefore, I believe that there are more or less common mistakes that are usually made when acquiring a debt, I would like to tell you about some that I have particularly seen.

_Fuente

One of the most common mistakes is acquiring debt to finance unnecessary expenses, and one of the worst, I could say. Buying things we don't need with money we don't have can lead us to accumulate debts that will later be difficult to pay. To avoid this, it is important to evaluate if we really need what we are buying and if we can pay for it without resorting to loans. By simply giving ourselves a few days to think about it, this can be avoided.

Another common mistake is not comparing the available options before taking on debt. There are different types of loans and credit cards, each with its own conditions and interest rates. Comparing these options will allow us to choose the one that best suits our needs and avoid paying more than necessary in interest. As they say, it is always important to read the fine print, because we could be falling into a trap through our own fault.

_Source

Furthermore, it is important to take into account our ability to pay when acquiring debt. Many people make the mistake of borrowing beyond their means, which can lead to long-term financial problems. That is to say, we cannot expect to be able to pay in one year, let's say 20,000 dollars, if we earn 5,000 a year and if we can even afford to pay our daily expenses. I assume this is illogical, don't you think?.

And something that I consider important is to have a plan to pay off the debt. Not having a plan is a serious mistake. Because it is as if we were leaving everything to chance, and this should not be, because when things are left like this, what happens is that we end up very badly. When it comes to money, it is definitely necessary that we organize ourselves in detail.

These are the things that I see most commonly in people who acquire debt, but who do not organize themselves, do not plan anything, and it is the main reason why they end up seeing debt as something bad. Can you think of anything else?