Why borrowing money is a risk

Posted: November 23, 2013 in Money
Tags: , , ,

It is plausible, that only when you are in dire need of money and you have no options left in front of you, you think about borrowing. I guess that’s not wrong though, but it becomes a risk when you borrow from several people and not ready to pay them back.

A recent incident happened at my office. One of my colleagues has been absconding for 20 days now. When called, his mobile was switched off. After dropping a mail he gave his dad’s number. When the manager called, his dad told that someone’s threatening him in office because he borrowed a huge amount from him. And then in very same day the manager came to know that he has borrowed from almost all his colleagues for his sister’s marriage. After all this, look at his misfortune that also took a loan and didn’t repay the instalments from quite some time. And so the bank guy called and said that he might be in danger and they will blacklist him. Once blacklisted, he will never be able to apply for loan from any banks.

SO you see, when difficulties come, they attack from all sides. Now he has reached a dead end. I feel sorry for him, what if he takes an extreme step? Hopefully he shouldn’t, but this is a big lesson for him.

There are many other reasons why borrowing money can be a risk and what are the measures taken:

  1. Can throw the relationship off: If you are closest of friends or relatives, borrowing money and no paying them in time can throw your relationship off and this would be affect for the lifetime.
  2. Keep a backup: Think twice before you ask for money from your friends and relatives. What if you are not able to repay? Keep a backup and then borrow. Don’t totally depend on them.
  3. Don’t pay in lump sum: Don’t wait for the time to pay in lump sum that time never comes. Instead whenever possible pay in instalments.
  4. Face the people: When you hide from people, that makes them sure that you have done a mistake and you will never pay them back their money and that’s when you are wrecking your image yourself.
  5. Keep the family in loop. Whenever you are borrowing money, keep your family members informed about that, so they can help you with the repayment when required and together you can come up with solutions.
  6. Keep this as a reminder: Keep all your credits as reminder in your mind as well as in writing, so that you know that you have a big credit and you have to get rid of that.
  7. Prioritize your expenses: In order to elude any complications a proper planning is mandatory. Like prioritize your expenses and first try to get rid of all the loans so that you are free from all the credits.

 

So first thing, monetary dealings with friends and family should be a big NO. Instead go to the banks and apply for a loan. This way at least you will pay back your loan to avoid higher interest rates. So all in all, avoid the risk factor related to borrowing money and keep yourself clean from all this monetary dealings.

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