First save or borrow if there is no money for a purchase

A dilemma, first save or borrow if you do not have the money for a purchase. If the purchase can wait a little longer, saving is an obvious option. But if the TV or washing machine suddenly breaks down, borrowing is inevitable. But going to the bank must take place with consultation.

We prefer to borrow than to save

prefer to borrow rather than save because we live in a consumer and envy society in which everyone immediately wants what the neighbor has. And if possible, even bigger, more beautiful and more expensive. But not everyone has that attitude. Fortunately, there are still diligent “goal savers”, people who would prefer to avoid the word credit with a wide berth. The writer of this piece is also one of those people. But under no circumstances should this give the impression that one must be absolutely against any form of financing! Undoubtedly, there are many situations conceivable in the life of an “ordinary citizen” (i.e. without mega-inheritance, bank robbery, drug trafficking and the like), which fully justify taking out a loan:

  • the purchase of your own home;
  • the acquisition of building land;
  • renovation of the home;
  • energy saving measures;
  • the payment of funeral costs;
  • the investment in your own business;
  • support for children;
  • conversion of expensive debit balances into revolving credit];
  • and much more.

Save or borrow first?

However, one must question the obnoxious habit of wanting to have any thing at once and of financing its possession with credit. This includes:

  • washing machine;
  • mobile phone;
  • flat screen TV;
  • DVD player;
  • holidays;
  • a dishwasher;
  • the purchase of shares (not very smart!);
  • swimming pool;
  • a new car;
  • and so forth.

Should these purchases, which can only rarely be classified as investments, really be financed with a loan, or worse, with an expensive overdraft? Is it necessary to slowly but surely make oneself dependent on banks and employers? Wouldn’t it be possible to save that 500 in advance or wait until the 13th month? And is it responsible for an 18-year-old who has just obtained his driver’s license to afford a new BMW with 150 hp, which not only consumes half his salary but also endangers his life or health? Even a generally liberal-minded person sees limits here.

Personal credit limit

Everyone must of course decide for themselves where their personal “credit limit” lies. A credit-financed holiday that offers much-needed relaxation is of course of much more value than the few euros in debit interest for a small, short-term overdraft. And the car loan that one absolutely needs for a new job can be a valuable investment for a debt-free future. It doesn’t necessarily have to be a new car, a gas guzzler or a fiscal glutton… But at least keep an overview of your finances and therefore control them yourself. And take timely measures to be financially independent.