Shop without borrowing if you can – Tips and guides – Loans

Unfortunately, something that is quite common is that you either buy things on installments, pay with your credit card or maybe even take a regular loan to pay something you want. All of these solutions are pretty much the same because they involve buying things with borrowed money.

Take out loans or trade in credit unnecessarily

Take out loans or trade in credit unnecessarily

Loans and credits are not necessarily bad and are a natural part of our daily lives, but what is important is that you do not take out loans or trade in credit unnecessarily. All loans and credits cost money in the form of interest and fees and what you buy becomes totally more expensive in this way than if you were to pay for them directly. Therefore, it is important to think before buying something with borrowed money.

We usually advise on how to find the best loans and how to save money if you decide to take out a loan, which of course is also good, but sometimes the solution is not to borrow at all. Maybe then you can’t always get all the things right when you want them, but it is also a part of life and something to be expected.

How then should you do when buying things?


Of course, it is best to simply buy things with money that you have in your account and that are not needed for other things like bills, food or whatever it is that you can do with the money in a normal month. If it is now that you want to buy something that you cannot really afford based on the money you have in the account, then how should you do it?

I intend to come up with suggestions on how to proceed if you want to buy things without shopping on credit or taking a loan for advice. Of course, these alternatives exist, but the idea is that you should avoid paying extra for things you want to buy.

Save money together and buy cash


If you do not have money in the account to buy what you want to buy then the best and most obvious advice is that you simply wait to buy until you can afford. Of course, you can only wait and wait for a time when you have more money and maybe a better economy, but you can also work actively to get advice.

The idea is that you simply start saving for what you want to buy. If, for example, you would like to have a nice jacket that costs USD 5,000 and you do not have more than USD 2,000 extra in the office at the moment, then it is taken USD 3,000. Then you need to save up to USD 3,000.

If you would only try to wait a day when you happen to have USD 5,000 over, it can take a long time before you can afford it, so it is better to take the matter into your own hands and set up a plan. Imagine that you save a certain amount each month, based on what you can reasonably save. It may be, for example, USD 200, 500 or 1,000.

The more you put away the faster you reach the goal. If you save USD 500 a month, it will take you six months to reach the USD 3,000 you need and if you spend USD 1,000 a month it will only take half that time. Of course, this also requires that you do not spend the USD 2,000 you had from the beginning but add them to the savings and leave them alone.

Once you get together for USD 5,000, you can buy the jacket you wanted. The nice thing about this is that you have no extra costs for your purchase, which you would otherwise have had if you had been shopping on credit. For example, interest on borrowed money, fees etc. can mean that you have to pay an additional thousand for the jacket in addition to what it costs in store and you do not have to with this method.

Another advantage is that you do not risk your finances by taking out loans or credits that you may have trouble repaying or that will make margins in your personal finances too small. It is a safe and good way to buy things.

The downside, if you can say it is a disadvantage, is that you have to wait X number of months before you can buy your jacket. However, this is usually such a thing that causes many to fall into the debt trap – that they buy things that they do not really have money for or afford. If you do not have money for a thing, it is a natural and sensible thing to wait to buy it until you can afford it, not to trade on credit.

Save money on what you intend to buy

Save money on what you intend to buy

One way to make it easier to buy what you want to buy is to be better at finding good prices. It is underestimated to compare prices from different stores etc to see which has the best deals. Similarly, it is good to watch out for something being sold at a promotional price or at a discount.

With a little luck you might be able to find your jacket for USD 4,000 instead of USD 5,000 if you are looking for a little. If you only have USD 2,000 in the account, you obviously still cannot afford to buy it straight away and then you should think through your alternatives and gladly wait until you can afford it. However, it is always better to buy at a lower price if possible.

This need not only apply to the exact thing you are going to buy, but your finances in general. If you can save money and cut down on your costs by buying cheaper things and finding lower prices on things that you put money into each month, you can also get more money over.

If you get more money, you also have better opportunities to buy things that you want to buy or to put more money into savings each month, to reach your savings goals faster. It’s a double win in that way.

Feel free to look for good prices and discounts etc when you can. Don’t take anyone for granted but look up what you can save on what you want. When you find something that is discounted, it will be a good savings that you can either put into your finances or use to reduce some one-off costs. There are many good sites on the Internet that help you compare prices or find offers and discounts so you can save money. 

If you really want to borrow – make it smart


Do you feel that you really want to buy something, even though you do not have the money for it right now, then it is important that you choose the best and cheapest way. After all, there are times when you might really want or maybe even have to make a purchase right away, even if the money is missing. It could be, for example, if the refrigerator breaks or some other emergency.

The best solution for this type of purchase is to save a buffer in advance, which you can use to pay for important things that appear in addition to the usual costs of the month. This buffer should only be used in emergency situations. However, not everyone has such a buffer unfortunately, or that there is some other reason for needing a credit.

If you have to take a credit, however, you have to make a good choice so that you do not have to spend a lot of unnecessary money on what you need to buy. Of course, the choices you make are greatly influenced by how much you need to borrow and some such circumstances, but you can often also influence the cost yourself.

For a small expense, for example USD 2,000, you have certain options. Here, the usual credit card may be the best solution. A credit card often has an interest-free period until the next invoice, which can be up to around 45 days. This means that you can buy on the card (and in practice borrow the money) without paying any interest for it, if you only pay the full amount when the bill arrives.

An interest-free credit, without any direct costs (except possibly the credit card’s annual fee) is nice and it is a good way to create a buffer that suffices for next month’s salary. You can get some help with some costs without it costing you anything extra. However, one should be careful not to pay the credit amount directly, as the interest rate is quite high when you choose to pay the amount.

For a slightly larger expense, such as USD 10,000 or more, another solution is probably better. Even if you can borrow so much on the credit card, you will probably not be able to afford to repay everything within 30-45 days. Then you get an expensive credit.

It is clearly better to invest in a classic private loan in this case. Then you can borrow the money for a year with a fairly low interest rate. Some lenders have higher interest rates here, but you should avoid these and look for sensible interest rates. The advantage then is that you can get an interest rate of, for example, 8 percent and that you only repay one-twelfth each month for a year’s time (you can get longer maturities too but it can be unnecessarily expensive). It clearly gives you more time to get the money you need.

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