Real talk about having loans or debts | Why do they do it

"Do you know a person who wants to have debts?" I bet you don't. But if I asked you again if "Do you know any person who has debts?" I am certain that it will be the other way around, that you know a lot. But why do they do it? Have you thought of this deep enough? Let's briefly share our thoughts regarding this topic here in this article.

real talk about loans

Years ago, when people ask me how to get a personal loan online or even offline, I usually give them "the face" expressing "Why are you even thinking of having one?" because it has a negative connotation for me. Let's face it, often, people do it not because they want to but because they think they need to. And most of the time, the guarantee of it being paid back is low so there are such short-term financial solutions out there like creditloan.com where loans are still possible to people even with bad credit.

But recently, I heard somewhere (from a friend or someone on television, can't remember exactly) that wealthy people actually have more debts than the average people do. So, I searched the internet and Googled to find out a little bit more about this and found a legitimate "perspective" or situation that can support the idea.

Generally, it is called leveraged investment. It is basically getting a loan with low interest and then investing it somewhere that gains higher yields.

For example, You loaned 15K with 8% interest per year in a bank but then invested it in stocks you studied well that will earn you 13% in the same year.. In this given case, you actually get to keep the 5% profit at the end of the year without even spending a single centavo. Well, this is just to give you the idea because in reality, people put the money on businesses, houses, or basically anything that appreciates its value over time.

Feel free to check Chinkee Tan's site for more financial tips and advice who happens to be a popular wealth coach/advisor here in PH.

why do people take loans

One of the basic questions that popped up in my mind though was "If they were really rich, why would they prefer loaning the money than paying it directly?" Some of the answers were aside that they will not use any of their current assets (which can be used for other things), lesser taxable income can be achieved. Such things that are actually worth to be contemplated, huh? I find it very smart and efficient that I am assuming that this strategy came from the actual experience of someone who is very frugal (in a good way). It's maximizing every opportunity to the dime!

Well, I personally can't relate to having debts because we were raised to avoid such things. But in the way the trend is going, it seems impossible to avoid especially since we are going towards the digital age where credit cards are the first option aside from using mobile wallets like GCASH and some online banking like BDO. So just to give my unsolicited advice:

Do not do loans for

- impulsive wants or luxury 

- temporary relief/answer to a problem or difficulty

- highly-priced things that are hard to pay back even if you think its "do-able"

Possible acceptable situations 

- for business/investment purposes only

- last resort for any emergency needs

on what situation will you consider doing a loan?

Another thing that I also remembered that person said was that she knows she will not get "that" rich because she doesn't have the guts to loan and risk the money.. Do you guys agree with that mentality? Well, all businesses have risks so in the end, I think, it will all boil down to risk management.

I don't have any loans right now (Thank God) or even plan to apply for one but the only possible exemption would be if I found something worth investing.. when that finally happens, maybe, maybe.. How about you, in what situation would you consider doing that loan? Let me know in the comment section below.