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Ideally we would suggest not getting in to debt or borrowing money you don’t have, but there is no such thing as ideal finances (unless maybe you are Elon Musk) or an ideal life. Sometimes we need to spend money we don’t currently either have, or if we do have, we don’t have access to.

It’s the middle of winter – your boiler breaks, what are you going to do? You can’t not get it repaired or replaced as not doing so will affect your quality of life and even impact your health and that of the people you live with.

You need your vehicle to commute, and it develops a fault or even breaks down entirely. Again, you need to get it sorted, especially as not having a vehicle could impact your job, and therefore your income and ability to pay other bills.

There are genuinely times when you need to borrow money, but here are some top tips to think about before taking out a new loan, credit card or other type of borrowing.

  • Do you really need to borrow the money? A new pair of shoes or a holiday which you can’t affrord is not necesarily something worth getting into debt over.
  • Is this something which could wait a bit longer for you to save up for? If you can afford to pay for that holiday or those shoes if you just save up for a few months, then maybe it is better to wait, as without the fees and charges it will be cheaper – you just need to learn to be a bit more patient.
  • Is there a cheaper form of finance available to you? It is worth shopping around and seeing what options are open to you. Just remember that you should any any interest or fees across the lifetime of the loan or borrowing to do a like for like comparison. Better deals, with lower interest are usually available for larger amounts of borrowing, but the interest on these higher amounts will rack up a lot faster so don’t get sucked into borrowing more than you need
  • Do you have a plan to pay it back without incurring too many charges or too much interest? All borrowing repayments should be budgeted for and included in your financial planning. Borrowing money with no realistic way of making the repayments is irresponsible and will end up with your debts spiralling, costing you more and impacting your finances for a much longer term (for example damaging your credit score or worse such as bankruptcy).

If you unsure as to whether or not you need to borrow additional money, speak to an independent financial adviser, or ideally, a debt charity. They will provide tailored and bespoke financial advice suitable for you and your circumstances. If you end up being a client of a debt charity, they can speak to the people you owe money to on your behalf and this can relieve a lot of stress and pressure. They will be there to support you through the process of improving and tranforming your finances, so don’t rule out the option!

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