I have always said discipline is the key, if you want to save and be financially free to the level that your money earns and works for you. But for some, nah…, for many, there is always a need to borrow money from somewhere to be spent on something else; and if this cannot be avoided, then it is best that you realize which and what are the bad ones to get money from, and where you should borrow money if you really need to.
Good ones:
- Borrow from your mortgage, or even from your St. Peter Plan if you one, or Insurance Policy, and other related plans.
- Credit line, this is ideal for small business as they offer lower interest rates, and would not really touch some of you liquid properties when used as collateral for a credit line.
- SSS, GSIS, or Pag-ibig , also because interest rates are lower and you borrow money from the contributions you made over the years. These are designed to help and ease financial problems of employees.
Bad ones:
- Loan sharks (teachers, policemen and money other employees succumb to this), because eventually the huge interest rates charged by these people will eaten a big chunk of your money overtime. Do not ever get a loan from these sources if it can be avoided.
- Pawnshops. I call these loan sharks in sheeps clothing! Look at the interest rates they charge you, and they will only consider 30 to 40 percent value of the item you used as collateral, so once you default it will be a sure gain for them. Overtime, if you keep paying interest and fails, it would be tantamount of giving them your collateral for free!! Think about it.
- Cash advance on your credit card; I do not have to tell you about the people I know hiding /avoiding calls from collecting agencies. The interest compounds and it will eat you up eventually.
- Avoid, if you can getting loan from family members, close friends and relatives – once to fail to pay them, it could sour relationships. So, eventually you will lose not only the money, but the relationships built over the years.