Myquestions

Debt is not always bad. If you have a great business idea and are able to get a bank or someone else to loan you some money – Go For It! The money which you will be getting back from your business venture will help you pay of the debt and once it’s paid all further profits are yours. This is known as Debt for Investment.

What you should try to avoid at all costs is Debt for Consumption.

Debt for Consumption is when you borrow money to buy things that will not bring you additional money such as home furniture, groceries, clothes. When you open accounts and pay for these things in small amounts every month the total amount you pay will be around twice the price you would have paid if you had saved up and bought the item in cash.

The retailers are more than happy to let you “take it on credit” because they know that they will make even more money if you pay in small monthly payments as opposed to one cash payment!

There is a growing trend by South Africans to take out loans for consumption, this is probably the best way to ensure that you remain broke – Avoid it, control yourself, you don’t need to have everything NOW !