Debt is one of those taboo topics that no one likes to discuss in public. It’s something that has always had a shame circle drawn around it, but really, without having some kind of debt, are you really living? One of the biggest debts that people end up having in their life is their mortgage, and while it doesn’t feel like a debt, that house you invested in isn’t yours until you’ve made that last payment. Sure, you’re the one paying for it every month, and eventually it will be outright yours. But until you stop making payments for good, the house belongs to the bank and is just a very expensive landlord.
Borrowing money comes with a huge stigma, but that doesn’t mean it shouldn’t be done. From low interest credit cards to credit unions, there are a lot of smart ways you can borrow money. I know you’re asking why you would want to borrow money in the first place, and the answer to that is your credit rating. You need to be able to build up a trust rating with the bank if you ever hope to own that coveted house you’ve been longing for. There are a good few situations where it is wholly appropriate to borrow money, the first is when it would be profitable for you and the second is when you don’t have a choice. The trick is to be smart in your borrowing and we’ve got three smart ways that you can borrow money and feel good about it.
1. 401(K) Loan
It’s the one thing that secures your future, so it makes sense to keep your hands off this unless you do truly need it. Employers can restrict the lending criteria, but you may be able to borrow against it should you need to. The rates for borrowing can be incredibly low, and you’re essentially paying the interest to yourself in the end. Try not to quit your job before you pay it back, though, as you can open yourself up to some penalties and taxes!
2. Zero-Percent Credit Cards
Finding a credit card with no interest for a teaser period of time is a good way to ease yourself into some borrowing. Usually these cards are for balance transfer or purchases only, so you could see yourself helped in the short term by a credit card like these. It’s definitely not a long-term solution, but if you find yourself in dire straits, you’ll be covered and can relax a little.
3. Family And Friends
Turning to family before you head for the more formal routes of borrowing is always preferable, but don’t borrow anything that you cannot pay back. Money and loved ones do not always mix, and it can be stupid to borrow money from friends altogether. However, if you take the proper precautions with a contract drawn up and keep transparency, it could be beneficial for borrowers.
There’s nothing wrong with borrowing cash once in a while, just be smart and cool while you do it!