Financing makes a lot of people nervous, especially those who are concerned about their financial standing and are working to improve it. Many people have a negative view of financing because of the millions of people who suffer from debt. We want that instant gratification of owning that coveted item, but rarely do we have the available cash to do so, so we turn to financing. Although thinking about financing in this light gives it negative connotations, there are some very good times that people should consider financing.
We all deserve to have the necessities of life, house, car, savings for the future, but these items are very expensive and cannot be purchased or maintained easily without the help of an outside source of cash. However, there is also a fine line between necessity and luxury in many of these cases. Here are some examples of times when you should be financing.
When you want to buy a house
We all need a roof over our heads; it is a necessity no doubt. However, any sort of housing is expensive. Many people look to the option of renting for any number of reasons, but when you are planning for your financial future, it is almost always more beneficial to buy instead of rent. Instead of giving money for rent and receiving little in return, you can use that same amount to invest in your future with a low-interest mortgage. In the future, if you decide to move you can turn that home into extra profits by renting it out. Consider the options that you have available in your area.
When you want to buy a car
There is a common debate about whether it is better to buy a new car or a used car. People who buy used save a lot of money upfront on taxes and insurance, but often times they end up paying more in car repairs and maintenance, and will end up buying another car sooner than a person who buys a new car. Most people consider the time saved and convenience worth the extra cost alone to buy new instead of used. You can find very reasonable loans from sites like TitleMax and other similar financial institutions. Consider how important it is to you to have a reliable mode of transportation. You can even buy something that’s a little fun if you shop around for great deals.
When an unexpected expense arises
We all have the occasional unexpected expense. It is something that we do not, and usually cannot, plan for. You should always have an emergency fund readily available, but if you run into a jam, it is perfectly fine to finance an unexpected expense. However, this is the time when people run into the most issues with their debt levels. Do not justify a new TV as a necessary expense. Use this form of financing only for essentials that you need every day, like unexpected car repairs.
When you are planning for the future
None of us can predict what will happen in the future. For this reason, many people feel that it is crucial to plan financially for the future. In most cases, this means creating an emergency fund, investing in life insurance and retirement plans. Some people, especially those who work on a strict budget their entire lives, will never have the ability to create these funds on their own without the help of financing. Try to figure out what you will need for your future and make a plan to finance the investment and have it paid off before you will need to access it.