Be judicious about your loan liabilities

Apr 3 2010

The craving to own some of the more expensive material things in life and the availability of easy finance options is a deadly combination which has resulted in many of us building up liabilities that we find difficult to manage as time passes.

Plastic money or indiscriminate use of credit cards with its resultant high interest payments is another thing that has plunged many people into deep debt. It is therefore necessary to take stock of what is affordable and how much of debt can one service before taking advantage of such easy finance schemes.

The starting point is your income and how much can you put aside for loan servicing every month without causing too much of a problem. Anything above fifty percent of your income is cause for alarm and should not be entered into. There is no point taking on a liability that you cannot service and pay increasing interest costs every month. This erodes your credit score and you will be at a disadvantage the next time you are in the hunt for a genuine loan.

You must also go easy on credit card expenses as they are among the costliest loans to pay back.

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