THE PROBLEM WITH TAKING LOANS
Whenever there is inflation in my country, you begin to hear about different initiatives that come forth in the ruse of helping the people.
Lately, in my state, I have been hearing about a lot of loans being given and a few people have been convincing me to take one because well, to them the money has little interest with a lot of time to pay back but I have been a bit skeptical about it for some reasons.
First of all, I have always hated having debts to a point where I don't even borrow airtime to pay back even when I am stranded so a loan generally is a scary phenomenon to me and I often wonder when speaking to these people because most don't even have a reason for wanting to take these loans and they are taking it just because they can.
WOULD I ADVISE ANYONE TO TAKE LOANS?
A friend of mine came to me for advice to ask if he should take a loan to start a business and I immediately shut the idea down because I do not believe in the idea of borrowing money to start a business.
Now this belief doesn't have anything to do with superstitions but I do think that taking a loan to start a business puts a lot of pressure on the business especially since the business might not work out and you would simply just end up in debt.
From observation, I have also realized that most people that take loans find it hard to ever pay back which ends up with them taking more loans to balance out the first one which begins a vicious cycle.
EXPERIENCES WITH LOANS
I have never had to take a loan before but I have seen a few people who were drawn in to take one and end up paying excessive interest or even losing their properties.
IN THE END,
The only time I would ever advise anyone to take a loan is if it is needed in a life or death situation or you have an assurance that you would be able to pay back with no stress.
I think having debts puts so much mental and emotional stress on people and if it can be avoided then the best thing to do is avoid it.
THANK YOU FOR OPENING THIS BOX OF PASSION
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This can get worst if you’re just starting a family life.
Debt free life is the best life
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I am often confused when I see people take loans to throw a wedding, like why would you want to start a marriage with burdens, It isn't essential at all.
I guess people love to show off!
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I already told my family that the only reason I would be throwing a bit wedding against my wishes is if they bankroll it because I can't
That's a healthy way of thinking about loans. Here in the Netherlands, a few loans are pretty universal. There's the student loans to help pay for your education, which almost every higher education student has. Then there's the mortgage to buy a house, because they are way too expensive to save up for on your own, especially because while saving, you have to live in a house you rent, which feels like throwing money away.
I have/had those loans and it still doesn't feel great to owe someone money. I paid off my student loans when I could and I pay extra to lower my mortgage whenever I have the money, because I want to lower my monthly expenses so I can feel more 'free'.
Loans seem to becoming more normal, with people being able to pay off their car, phone, tv, whatever in installments. For those unnecessary things, all I can think is 'Why the heck would you buy them if you don't have the money?'.
Thankfully in my country, a lot of people don't have student loans because you are either on a scholarship or your parents are paying for your schooling, and also we don't have mortgages but I guess a lot of people still take loans to start businesses and some people just love to borrow.
For me, I don't ever see myself taking loans for no just reason, it is an incredible burden I wouldn't ever want.
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Yesterday, a woman i know came to plead with me asking for support as she's about to be displaced from her store for collecting a loan which she hasn't been able to pay. My mom made the same mistake once and we both struggled to make ends meet. Not a good idea to me.
It isn't a good idea at all and I am praying to never have a reason to take one.
I hope the lady is good though?
I think so. We never got to talk after that. Maybe she sorted it out.
Hopefully, she did.
The nice thing about DeFi and what is forming is people will be able to give loans to themselves.
That is an interesting concept.
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The thought of that is very nice, I hope it happens sooner than later.
Its quite normal to take out loans in order to start a business since it can be needed to pay upfront for business expensive.
Also. Most rich people take a shit ton of loans to live off, just so they dont need to get an income and therefore dont have to pay taxes.
Since the loan interest is lower than the taxes :)
It isn't exactly normal here, most people save to start businesses, or at least those I know.
They also don't pay a whole lot of taxes so people don't live off loans hence it's weird to me.
Ye I get its a culture thing :D
Yes it is.
I agree with you 100%
No one gives out loans just to be nice. They give them out to make money. Money someone doesn't have.
And most people seem to forget this, loans are given out for profit not out of niceness.
Hi, khoola from @dreemport
yeah agree... whole heartedly I had those feelings once, I still do.
but let me add some of my opinion or just want to share my knowledge:
loans are not all that bad, especially starting a business (most entrepreneurs take a loan to start), but still that is them taking all the necessary precautions and calculation, then letting the profit from the business pay for the loan and still the percentage of success depends on the how much preparation did someone do.
taking a loan that would seem profitable for future basis. Example, buying a home (or any asset) today would be less expensive than buying it in the future especially if you find a nice spot where you can probably even start a small business.
I for one, take loans from banks (not just banks) to increase my credibility with them, being a good payer they give better and more acceptable terms even offers (profitable ones, that you can retail or sell to another whom that doesn't have this perks) they wouldn't just give anyone.
but of course not everything goes according to plan... there will be times that it is hard to pay or couldn't pay at all. 😥
sorry if this became too long.
Yeah loans aren't bad but I am not a fan of them, I've seen people take them a lot, and it doesn't end up well.
Here in my country most people don't take loans from banks or to buy houses either.
Your comment wasn't long, I appreciated your point of view.
In my opinion one of the worst reasons to take loan is to start a business, there a 50% chance the business will fail. How then do they pay the loan and interest?
This is the reason I afford debt by all means.
Ends up adding more debt to pay the first debt, loans are a no, no and I see people take loans for weddings, like what?
I avoid it a lot too, I always tell myself if this loan wasn't there, what would you do.
Loan for a wedding?? because of what na? So after taking a loan to please other people what will they use in the marriage? Imagine putting yourself in debt just to entertain a bunch of people you don't even like.
People that don't even like you.
It happens a lot oh, especially in Nigeria, instead of taking a loan for a wedding I would for a honeymoon, at least I know it's for me.
Asin ehn. Most of them are just there for ratings. They want to know who did it best.
Omo, I'm not even suprised, Nigerians be doing the most for parties.
Personally, I'd rather miss out than borrow for luxury.
Doing the whole most.
I totally understand your sentiments and it's good to always know what works for us as you have identified yours. I wouldn't advice anyone to take loans to start up a business either especially with how most start ups are. I would advice people to take it if their business is already up and running and they can at least estimate what they are expecting based on past incomes but to start a new business that hasn't been tested? Nah. Too much pressure, too much problems.
Even with a running business, you never know what could go wrong and what could put you in debt.
That's right but sometimes, taking a loan could help when you want to expand sometimes. I won't do it but I have seen a lot of people get through with it...even the supposed rich. As long as your current income can offset the monthly payment comfortably with a lot more left, why not. Imagine someone paying a loan of 500,000 naira monthly and yet all he gets monthly on his best day is 600,000 naira. It doesn't make much sense.
My director back when I was in Ibadan was seeing monthly payment of 2,000,000 + and that's a worst case. He needed to expand and he should be paying around 400,000 monthly with loan... To me, that makes sense...but just like you sha... I can't do it 😂😂🤣😂
I would just be thinking every day if I take a loan and I believe it might make you too cautious in your business.
Like I said, it depends on the person, the kind of business and the purpose. It helps some to be prudent when they know they have a loan to service. It's all about the person. My kind of person, I won't even go near it but I've seen it work for some... So it depends.
That's true, it could be motivation.
Absolutely, my dear.
I agree with you 110%!
And it's funny, exactly as you mention, the moment when people are suffering, there is always someone to offer a loan. It's always so easy to pay back and who knows what else...until they've got you and you miss one payment... Then reality kicks in!
No, I agree with you. Stay away unless you absolutely have no other alternative.
I got here via @dreemport.
It's crazy how these loans appear out of no where.
Very true!