Can you live without debts?

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Date14/06/2016

The loan is one of the oldest financial actions – already in old times people were lending the money to each other in order to improve their living conditions. Also nowadays, like hundreds of years ago, money is lend to improve our living conditions or to develop a personal business.

It may seem that it is impossible to live without loans, because how it is possible to do without housing or house repair? And what about higher education and new car? These things without credit may seem like far and unreachable dreams, but, believe it or not, life without loan commitments is actually possible. Of course, life like this may seem more complicated, but everything can be reached with resolve and patience. Everything depends on person’s viewpoint – some will say, that it is impossible to live without debts, but some will say, that it is possible.

People, who think that it is possible to live without debts, can be divided in two groups. One group has some inheritance from previous generations. These people inherit something from their parents, grandparents or other family members, for example, living properties, farms, businesses, lands, woods and money. This group of people regardless of their personal input and achievements are ensured for stable living. Other group includes people who have large income for their job, for example, high-ranking officials. Also people like these do not need loans, because their income fully covers both monthly payments and wanted purchases. Another group is students who have earned a possibility to study in a university for free. These people were learning hardly from year to year, earning excellent marks which allowed them to study for free and to get a scholarship.

Nowadays a lot of people have so small income, that banks do not lend them money at all. At first banks evaluate clients ability to pay, evaluating, whether the person will be able to repay the loan and whether the bank will get some benefit, for example, property, if person will not be able to repay the loan. Loans are not also lend for people who are seriously ill or very old, as well as for young people who barely have got a paid job.

The best decision would be to create savings for unpredicted situations. If you will put down a certain amount of money each month, within half year or year you will save quite big amount of money which will be available like reserve fund for any situation of life. This is the way how saved money can be used for personal needs. Decision about money saving is incomparably better than decision about money borrowing. Unfortunately, the majority of people do not have such savings, therefore, they borrow loans of different amounts. When you borrow the money and repay the loan, you are overpaying, because most loans have high interest rates, therefore, in long term borrower loses a big amount of money.

Of course, a lot of people just do not see any other solution. They do not want to save money – they want to live today, not thinking about tomorrow. It seems like everyone wants to obtain a personal house, therefore, those who cannot live without loans can get mortgage loans which have different amounts and repayment terms. However, before you decide to buy a house, you have to evaluate your financial situation, as well as your future plans, thinking about number of family members and living place, where you would love to live the biggest part of your life or your entire life. It is also recommended to think about improvement of your financial situation, so an income would be bigger than expenses. Ensure that your monthly income would be stable and you would be able to create money savings. Do not forget to read a credit agreement and conditions before you sign it. Everyone of us have two options – borrow the money or not to borrow the money – everything is in our own hands.