How to borrow money correctly so as not to drown in debt

1. Assess the risks

Before taking on debt obligations, imagine how it could end in the worst case for you.

If you want to borrow money from a friend, consider what happens if you cannot repay the debt. Personal finance is a forbidden area that friendships should not touch. Like a joint venture, debt has ruined many relationships.

If you are planning to take out a loan for a large amount, think about whether you are firmly in your workplace, whether you have a financial safety cushion. The fear of being fired in the presence of a large loan and lack of reserve capital increases significantly and can lead you to burnout.

Also, imagine what you have to give up: annual travel, expensive gifts for loved ones, favorite entertainment. And so that debts do not force you to abandon not only the usual, but also the most necessary, estimate how much you can afford.

2. Calculate how much money you can take

Take the most essential expenses for the month: rent, food, transportation, child costs. Subtract the resulting amount from your salary, and divide everything that is left by two - you can handle about such a monthly loan payment without special restrictions. Usually it is about 20-30% of the salary.

If you take a loan "back to back", any unforeseen situation, be it illness, breakdown of something in the apartment or the need to buy new things for yourself, will knock you out of the rut and leave you without money.

Therefore, it is better to choose a monthly payment in the amount of about 20% of the salary, even if this requires an increase in the payment period. In case of an increase in income, you will be able to repay the debt ahead of schedule (of course, if this is provided for by the terms of your loan agreement).

If you want a very comfortable payment mode, borrow a small amount for a long time if possible. You will overpay for using the loan, but you will minimize your risks.

3. Make sure you really need debt

Before applying to a bank or borrowing from a friend, check to see if you can do without a loan. Maybe you will be able to accumulate the required amount by giving up some entertainment or bad habits?

Also consider additional sources of income. Earn money in your free time until you save up for the desired item. This approach will not only help you avoid credit, but it will also show if you really need the purchase.

Since you didn’t make credit money, it’s much easier to spend it on something unnecessary.

When you earn extra money, sacrificing your vacation, or deny yourself the usual entertainment, you begin to value money.

Perhaps you will give up the desired thing altogether, realizing that it is not so necessary.

If you cannot do without a purchase, and it is not profitable to save for it - over time it will increase in price or lose its relevance - study all loan products before making a choice.

4. Consider different loan products

Now in many stores of household appliances, fur coats and other expensive goods, they offer to arrange a loan on the spot. It is convenient, but not always profitable. Yes, you will get the desired item almost instantly, but the loan overpayment will be significant.

Compare different products and offers: consumer loans, loans, credit cards, installment cards. They all have their own characteristics, pros and cons. As a rule, the longer the terms of consideration of applications and the requirements for the borrower, the more profitable the offer, and vice versa.

This way you can choose the conditions that best suit your needs. The main thing is to carefully read the terms of the contract!

5. Don't rush things

Spend at least three days comparing different loan offers and pondering. So you can finally decide whether you need to take out a loan at all or you can do without it, and also choose the most suitable option.

Loans and credits are a complex topic that you definitely need to study before heading to the bank. Haste can not only cost you decent money, but also ruin your life for years to come.

If you want to learn about all the features and possibilities of modern lending, visit the lecture "How to borrow, so as not to regret it" within the project "Financial Environment".

Three speakers are participating in the lecture: Viktor Klimov, head of the For Borrowers' Rights project, Evgenia Lazareva, member of the Opora Rossii women's entrepreneurship development committee, and Anastasia Tarasova, a blogger and financial consultant.

During the lecture, you will understand existing loan products, get advice on financial planning and learn what to do in unforeseen circumstances: how to deal with imposed insurance, what to do in case of bankruptcy, how to deal with collectors. At the end of the lecture, you will be able to ask questions and get advice from experts on how to get out of this situation.

The lecture should be attended by everyone who has at least one loan or is going to become a borrower in the near future, is looking for opportunities for a more profitable loan or wants to get rid of existing debts faster.

The lecture will take place on October 18 at 19:00 in the library named after N. A. Nekrasov at the address: Moscow, st. Baumanskaya, 58/25, str. 14. To take part in the event, follow the link below and register.