When we see a path forward in a financial sense, it’s not hard to feel excited. For instance, if we realise we could potentially go for that mortgage now, or that we have a line of credit we could open, or perhaps we could finance a large purchase thanks to our credit being stronger, many of us find ourselves jumping for joy and enthusiasm that this is possible.
That being said, just because you have a financial path open in front of you, it doesn’t mean you should jump at it without thought. Sometimes, there are trade-offs we must consider, such as intensive repayment rates, or perhaps the inability of our financial standing to actually justify taking out that loan we are eligible for.
In order to make these decisions easier for you, we have decided to come up with a list of questions you could and should ask yourself before jumping into that large investment or financial commitment.This can help keep you grounded, as well as less impulsive, which is often a habitual process that can place any of us into financial dire straits.
How Will This Affect Your Future Plans?
It’s important to consider how any financial commitment will affect your financial plans. For instance, it might be that you’re planning for a child, but you’re in the middle of a job promotion that seems to be taking up all of your time. How long until this settles? Will you be able to easily keep going on one income, or one income on maternity support?
Might it be that the house you hope to move into is actually quite an intensive investment thanks to how unfinished it is? Renovating this barn might be a wonderful idea in the long run, but balancing your yearly expenditure may require an extreme dedicated to time-focused thinking. This is worth considering in the long run, as it could make a real difference regarding how you plan your time and overcome certain strict challenges going forward.
Can I Wait For This?
Impulse control is important when managing your finances. For instance, it might be that you’re walking through a shopping mall. You realise that your iPhone is outdated, and there’s a brand new one out you’ve been wanting for some time. You have the option to join a phone contract to get it for free, right now, from a local carrier store. Then you realise that coming home and waiting a little, scouring online offers, and maybe even finding a resource to sell your current model could be a much shrewder move. These efforts and methods can sound simple, but it’s this principles that can often prevent us from diving into financial investments or commitments that will have a long-term affect.
Can you wait for this potential commitment to bear fruit? If not, at least you’ll have thought through the consequences. If yes, you may be able to get a better deal, or ensure that it works out in your favour. That has to be a reliable and worthwhile path forward.
Will It Affect My Financial Standing?
Your financial standing is comprised from more than just how much money or savings you have at any one time. Considering your credit commitment is also an important responsibility because it can quite easily help you avoid making long-term payments that you may not be able to keep up with. Furthermore, waiting until your credit score is stronger (by keeping up with commitments and paying off loans on time) can help you gain more of a credit score each and every month, which could ultimately lead to a better, stronger deal.
This can affect how much of a deposit you may need to put down for a house, and what size of loan you can get, for instance. For some, it might be that instead of opting for that loan, they decide to go for a starting credit card to help pay off bills and build their credit score over time. How will your commitment affect your financial standing? Will it potentially open up avenues of risk? Or, provided you keep to your commitments, could you be in a much better place at the end of it? It’s worth calculating that question.
What Are The Exact Figures?
Whenever you come into any form of financial decision-making process, it’s essential for you to have the strict numbers and figures to back you up. You simply cannot work with guesstimates or vague understanding. For instance, an online mortgage calculator will help you understand just what kind of payments you may wish to make, or what you may be eligible for.
This can help you clearly answer the question regarding your capability of repayment, and if you should apply for this process in the first place. Furthermore, understanding the exact figures of how much debt you have, what your income is, what benefits you receive, how you budget, and what investments you have already made (including percentage fees and cutoffs) can help you more easily forecast your financial standing in the future. This can help any
How Long Will This Affect Me?
It’s also very important to know that financial commitments take time to settle, and so whatever the commitment is, it’s important to place a timeline on it. For instance, it might be that you’ve just started a work contract that lasts twelve months, pending a review. Is your job security such (in this instance), that you can justify financing a car for your new salary right away? Will you be able to pay it off by the end of the year, as further work at this level may not be guaranteed? Keeping ourselves in check by continually assessing the practicality of our financial engagements, with all metrics considered, is quite clearly essential.
With this advice, we hope you can more easily understand if you should hook yourself to that financial commitment or not. If not, you have saved yourself from a difficult situation. If it is, that’s great! You can move forward with confidence.
You must log in to post a comment.