You all have a time when your wages run out earlier than the month. In short, your month is longer than your wage. This is an annoying thing, but it is not insurmountable. With a little more economical approach, you often reach the end of the month without really causing major problems. You do your shopping less often, buy products on offer instead of luxury products, and have friends invite you to dinner when there is really nothing left in your inventory and you really have no money to survive until the end of the month.
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This in itself is not a reason to start borrowing money; you are a bit tight but it can be bridged. It becomes more annoying if you don’t have it that wide, and at that moment your washing machine will fail. Suddenly you are faced with the purchase of an expensive electrical appliance unless you want to go back to your mother with your laundry. At that time it is good to see if there is an alternative to be able to buy an electrical device while you do not have the money in your bank account. In that case, click the link to Payday Now for low credit loans online sounds like an acceptable solution.
Create a financial buffer
If you do not want to be in debt for the purchase of an electrical device that suddenly fails, then it is good to have a reserve in hand. When you automatically save a small amount of a few tens per month, you gradually build up a buffer to absorb financial setbacks. You then save as it were ‘in case the washing machine breaks down’.
A savings account with a certain minimum amount on it is, therefore, a good alternative to borrowing money. According to Nibud, there is a minimum amount that you should have in your savings account in order to have a healthy buffer. We have looked up those amounts for you.
How much should you keep in mind
If you are single and live in a rented house, it is recommended that you keep a minimum amount of 3500 euros. This money is needed, for example, if the car needs an expensive service, or if you are unable to pay your rent due to an unexpected financial setback such as lost income or unexpectedly high expenses. This, along with other fixed costs, is something that naturally has to be paid through. A buffer of 3500 euros is then a minimum requirement.
Are you married or cohabiting, do you have no children, do you have a car worth at least 5000 euros and do you live in an owner-occupied home; in that case, you must maintain a buffer of at least 4000 euros. In that case, you have enough money to continue paying the mortgage and fixed costs in the event of a financial setback. In that case, you can possibly sell the car to provide an extra reserve. However, the amount can also be used if you have a repair of the car that happens to be higher than intended.
If you are married or cohabiting, you have two children, you live in an owner-occupied home and you have a car of at least 10,000 euros, then an amount of 5,000 euros is the minimum to have. In that case, you can also take care of a financial setback, just like a washing machine that breaks. These are essential issues in a family situation.
A revolving credit
Borrowing money is something you can, for example, help if, due to circumstances, you have to have an extra amount in hand during a certain period because, for example, you have unexpected expenses that are higher than your buffer. In that case, you can take out a revolving credit with your bank, for example. In that case, the bank will want income data from you and your partner, as well as information about your assets such as a house and a car. After all, the bank wants to be sure that you have enough collateral if you cannot repay the loan amount.
Revolving credit is a loan in which you only pay interest on the amount that is actually red on you. It is advisable to repay an amount on a monthly basis, if only because the interest rate in your case can be very negative.
A second mortgage
Another reason for borrowing money is, for example, the renovation of your house. This is something that immediately increases the value of your home, so it is a kind of investment. If all goes well you have not lost the borrowed money; it is processed in your home. If you are going to borrow in this way, it is advisable to take out a second mortgage. You may spend more on the repayments of your mortgage, but on the other hand, the costs are deductible from the tax. Also, the interest rate of a second mortgage is still lower than the rate that you would have spent on a loan in other cases.
When should you not borrow
A mistake many people make is that they borrow money for an expense that is not necessary at all, but that they would like to do. In such a case, think of a loan for an expensive vacation with your family or for a second car while you do not need it at that moment. In those cases, many people opt for a so-called flash credit. An amount that you borrow and that you must repay a month later at an extortionate interest. Several families have already run into serious problems with such a flash loan. So you always have to check if an expense at a time when you don’t have the money is worth it to take out a loan if in doubt the advice applies; do not.