Do I Really Need to Borrow Money?

Exhaust all financial resources before you turn to loans. “Do not borrow on a whim,” says pawnshop owner Rodrigo Llanera. “There should be a need, because it will cost you more money to pay it back.” Llanera syas some people borrow money so they can keep up with the Joneses. “For example , cars are not income-generating. Magiging sikat ka nga for a while, but you have to think about maintenance and gasoline, too. It’s like double jeopardy if you don’t have the money to pay back the loan.”

As a general rule, both Diomampo and Llanera say, borrow to invest and save to pay for expenses, especially non-essentials. The rule makes sense. Whey? Because in exchange for the loan, you get something of value-which will allow you to make money from or which you can sell if the need arises.

When borrowing for business, always ask: How badly does my company need the money? Will it be start up or expand the business? Will the company fall without the funding? but the wo most critical questions you have to answer are: Could I repay the loan? Equally important: Base your decisions on facts, not guesswork. (source: Good Housekeeping)