Borrowing money is a big financial step, and it can help you or hurt you—depending on how you manage it. Many a times, the purchases that seem necessary aren't really necessary upon further consideration. You can postpone most purchases until you have saved up the money to buy them in cash, rather than going into debt to make the purchase now.
The most substantial loan you’ll ever take is for buying a home. If you can afford a sizable down payment and it’s a home that is within (or below) your means, it might mean taking out a loan is worth it. Education loan is another good debt that can help you create a better financial future.
When you are taking a loan for buying a car, it's tempting to go all out - opting for the high-end model with all the extra features. However, when you're going into debt for a purchase, it's smarter to scale back and buy a used version, an older model, or otherwise seek out cheaper options. Whatever money you save, you can invest those funds for your next big purchase.
However, any other kind of loan should be taken only upon careful consideration. Borrowing money to pay for things like medical bills, refurbishing your house or buying a new phone is never ideal. We recommend building up emergency savings first and ensuring you a health insurance plan before you start spending on discretionary things. Also, use your savings and investments for such type of expenses rather than borrowing.
Let us help you with your debt planning. Reach out to us on contactus@arihantcapital.com