How long you'll enjoy the benefits of a loan?
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Posted On :
Nov-13-2011
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Article Word Count :
517
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To use credit cards most effectively, you should buy things that last.
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Another way of looking at this is to avoid, with loans to buy things that have a very short life. A rule of thumb: You should be able to pay off the debt by the end of the element life. People who follow this rule, are able to stay on their debts. This section is not meant to talk about spending habits, but you should understand the simple concept of the lifetime value of your purchases.
What is a Long Life?
Before you download anything or apply for a loan, consider how long you enjoy the benefits of the object. For example, consider a night in the city - maybe a couple of cocktails in a stylish setting, a gourmet dinner, a show and a trip by taxi. It can be very tempting to use your credit card for a night of luxury. But consider how long you pay for this one night. You can not live again, except in your memory, but the debt on your cards.
If you make the minimum payments, it may take decades to pay off a debt. Do you really want to pay for your night for the next 20 years? What if you want another night? It's okay to indulge on themselves from time to time, but borrowing for things that come and go quickly in a hole.
If you have to borrow for things that give you the entire time you borrow to make payments on them. A house is a good example. Sure you have the payments for many years to make, and you could never own theThing entirely, but you get used to living in it and in any market appreciation.
Upside-Down Car
Another example could be your car. You sometimes hear that someone "upside down" on the auto loan. What it means to stand on your head? It means that the loan amount is higher than the value of the car. If you sold the car at current market prices, you would not pay off the loan balance. This happens when the car loses value faster than the debt is paid down. If you need another car, and your head is the only way to get one, take a loss on the current car and even more debt. Also, you're not moving forward, you are falling behind.
Now that you know the concept to everything you are looking to the purchase of electricity or with the help of a loan thinking. Which will last longer, your joy of it, or your debt? If the debt is far outlast the item to reconsider the purchase.
Like the night in the city, the people on the head to get their car loans because of shortsightedness. Too many car buyers look at their monthly payments when they consider a purchase. One way to lower your monthly payment is the term of your loan extended. This is fine if the automatic will be at least as long as your loan. If it does not, your debt survives the item you have purchased.
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Article Source :
http://www.articleseen.com/Article_How long you'll enjoy the benefits of a loan?_103639.aspx
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Author Resource :
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Keywords :
payments, finance,
Category :
Finance
:
Finance
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