We at Good Finance cannot stress enough how important it is to have a buffer if you want a safe and stable economy, not least if you own a car that may require expensive repairs or a villa where you may need to buy a new hot water heater if it wants really bad.
This with buffer is also especially important for those who have small margins because if you are hit by a large unforeseen fee, there is otherwise a big risk that you have to take out a loan to cover the expense. Or at worst, you might have such a poor ability to pay that you can’t get a loan at all and what should you do then? Stand without a car or hot water?
Without a buffer, you may be forced to take out a loan – if you get
Some who find it difficult to get a bank loan due to poor payment ability are forced to take a sms loan instead and, as you know, the interest rates for these loans are significantly higher than for a bank loan. Now, Good Finance does not think that this with the interest rate is the biggest problem since the difference in the total loan cost between a loan of USD 10000 that you repay within a month and a private loan with the sum paid off in a year is not so extremely big, the big problem is being able to repay a sms loan of USD 10000 in 1-3 months.
If you have not been able to save up for a buffer and need money really quickly, you can of course turn to a sms lender who pays sms directly but before you do you have to be absolutely sure that you can repay the loan otherwise you can end up really sticky.
Remove the buffer or borrow?
It is therefore very important to save for a buffer so that you do not have to take out a loan that you have to pay interest on if you suffer any costly unforeseen event. But how do you do if you have a buffer and are thinking of buying a car for example? Should you burn all your buffer on a car instead of taking out a loan for which you have to pay interest? We don’t think so. It is never good to stand without a buffer if something should happen and since the car loan is not very expensive today it is probably better to take a loan and keep its buffer, however you may be able to cover the down payment with it.
Here we show you what we think you should borrow and not borrow:
Do not lend to this
- Computers, tablets, cell phones and hobbies. These kinds of consumer goods should you try to save together or cover with part of your buffer if you have to.
- Unforeseen expenses such as broken hot water heater, washing machine, dishwasher, car repair and other necessary pain. It is above all this that you should use your buffer for.
- Buying a cheap used car because your old car has been paved and not worth repairing.
- Also, do not lend to the entire housing’s cash stake, but you should also not pay the entire stake with your buffer if it means it disappears completely.
Borrow to this
- New or better used cars. This kind of thing is usually so expensive that your entire buffer probably smokes if you use it and it is not good.
- Purchase of housing. Yes, who can afford to buy a home with their own money?