ABCwages.com
Recently, I published a piece about the worst possible ways to
borrow money. Unfortunately, many of those ways are commonly used by
people across America. Many use them because they do not feel that they
have an alternative. However, that's seldom the case. Here are a few
alternatives that may help you stop wasting money on high interest loan
sources.
ABCwages.com
Zero percent interest credit cards are a great way to get the things that you need over the short term. Most of these offers are simply teaser rates and will increase at the end of the initial term. That term is usually a year and includes you ''free'' rollover from other credit cards. This way of ''borrowing'' only works if you pay the debt down or eliminate it completely by the end of the teaser term.
If you are looking at a large expense, a second mortgage may make sense. The rate on these mortgages is usually fixed and low. A second mortgage makes more sense than a home equity line of credit in two aspects: an equity line is usually a variable rate loan and the interest is always much higher than the rate on a second mortgage. These loans only make sense for expenses like a home addition or college tuition, not to support everyday living.
ABCwages.com
If you find yourself in a truly desperate situation, a 401(k) loan may make sense. The rates are usually low and you are actually paying the interest back to yourself. Problems occur if the need for the loan is a recurring one. Your employer will take automatic payments from your paycheck, so if are going to face a recurring debt, these loans do not make sense.
When all else fails, turn to family or friends. This a last ditch, no other option, way to borrow money. To prevent hard feelings and the loss of a friend, put together a written document so that everyone is on the same page as far as repayment and interest if any. Then make every payment on time.
The theme here is to limit your borrowing to necessities only. Taking on debt to sustain a lifestyle that is out of your income reach is a formula for disaster. Take care to budget carefully and you should find your need for debt diminishes with time.
ABCwages.com
Zero percent interest credit cards are a great way to get the things that you need over the short term. Most of these offers are simply teaser rates and will increase at the end of the initial term. That term is usually a year and includes you ''free'' rollover from other credit cards. This way of ''borrowing'' only works if you pay the debt down or eliminate it completely by the end of the teaser term.
If you are looking at a large expense, a second mortgage may make sense. The rate on these mortgages is usually fixed and low. A second mortgage makes more sense than a home equity line of credit in two aspects: an equity line is usually a variable rate loan and the interest is always much higher than the rate on a second mortgage. These loans only make sense for expenses like a home addition or college tuition, not to support everyday living.
ABCwages.com
If you find yourself in a truly desperate situation, a 401(k) loan may make sense. The rates are usually low and you are actually paying the interest back to yourself. Problems occur if the need for the loan is a recurring one. Your employer will take automatic payments from your paycheck, so if are going to face a recurring debt, these loans do not make sense.
When all else fails, turn to family or friends. This a last ditch, no other option, way to borrow money. To prevent hard feelings and the loss of a friend, put together a written document so that everyone is on the same page as far as repayment and interest if any. Then make every payment on time.
The theme here is to limit your borrowing to necessities only. Taking on debt to sustain a lifestyle that is out of your income reach is a formula for disaster. Take care to budget carefully and you should find your need for debt diminishes with time.