5 Ways Not to Use a Loan if you are On in Tight Budget

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By: Madoline Hatter
on 4th Jun,2013

When things get too rough around the home and the bills keep piling up, many people will get a loan in order to subside some of the debt collectors.
5 Ways Not to Use a Loan if you are On in Tight Budget


When things get too rough around the home and the bills keep piling up, many people will get a loan in order to subside some of the debt collectors. However. people will ofien use the loan money inappropriately and cause more damage to their financial situation then there was before.

A loan can be beneficial providing it can be used to benefit your household. There are a few ways you don't want to use a loan as they can be detrimental in order to maintain a financial standing.

I. Electricity Bills - Many times, the electric bill will become so high that you just can't seem to get caught up. Even if you are able to cover the monthly bill, you could have a great amount of past-due charges that loom over your head. However, paying this off with a loan could be detrimental as now you have an additional bill to pay - the loan. Now, you'd have an electricity
payment and a loan payment due. It is better to set up a payment plan with the power company in order to get your past—dues paid off.

2. Furniture Rentals - Although you may be infatuated with that new couch, getting a loan to pay it off will still put that payment in your monthly budget. It is better to let the fumiture go and
save your money to tackle other bills. Unless it is a necessary item such as a refrigerator, it is a luxury that you can do without until you can afford the monthly payments or save enough money to buy it outright for a third of what these firmiture rental businesses offer.

3. Water & Sewage - The water and sewage bill of your home is another occurrence that happens monthly. Using a loan to pay bills that are constantly accruing debt will only put that
additional payment into your monthly budget that you may not have the money for. Like the electricity above, the city is more interested in getting its money than taking you to collections. If you work out a payment plan for any past-due amounts, you could put yourself in a better financial situation.

4. Extravagauces - Although you may want that new car, new wardrobe, or latest gaming console, getting a loan to pay for these items could make life hard on yourself. Used cars from the newspaper can be just as reliable, clothing can be picked up from second-hand stores, and the gaming console is a luxury you may not be able to afford. Save your money for these items instead of taking a loan.

5. Investments - Many people will put themselves into debt in order to buy into a "sure thing." When you are investing into a business or money-making scheme, there is no such instance.

There are too many variables to say with 100-percent certainty that any situation will pay off. Never invest money you can't afford to lose.

If at all possible, you should try to avoid getting a loan unless you are able to consolidate your non-accming debts into a single lower payment. Bills that are continuously accruing should be reduced or removed in order to get a more stable situation for your household. If you can't afford a cable bill, then you can go without. Besides, most entertainment is available on the Internet anyway. Find ways to lower your household expenses in order to reduce your need for a loan to keep the tops spinning.

This article is contributed by Madoline Hatter. Madoline is a freelance writer and blog junkie from http://www.changeofaddressform.com/ You can reach her at: m.hatterl2@gmail.com

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