Carter Lowe Creator, entrepreneur, and self-care advocate
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Live on credit now or save and buy later?

how to buy an apartment correctly? How to buy a car? How to buy household appliances and other gadgets? Loan for training or renovation.

There is a material goal (car, apartment), but there is not enough money to fully pay for it, there is only 30-50% of the cost, and the question arose: how to do it better? Should I take out a loan now or save up and buy later?

Looking ahead, let's say right away that there is no unambiguous answer to this question. Everything depends on the situation.

Let's give a few examples, and on their basis you, dear reader, will be able to make the right choice.

How to buy an apartment?

If your goal is an apartment, then most likely it is right, and often it is only possible to buy an apartment on credit. Why?

1) % growth in real estate value is higher than the % rate on the loan;

2) the level of accumulation (safe, let's say a deposit) is also lower than the rate of growth in value, so saving is pointless.

The only exception is if the growth rate of your income is significantly higher than the growth in the value of real estate, then you can wait a few years. But such cases are rare.

Therefore, since saving up for an apartment is problematic, we take an apartment on credit. BUT you must immediately calculate your own strength, most people rely on income growth and drive themselves into exorbitant debts and dooming themselves to a 20-30 year debt hole.

Limit 30-50% of your income on all loan costs - principal and interest payments. Most likely, apartment and health insurance will also be imposed, so take them into account. This is usually + 0.5-1% per annum of the loan amount.

How to buy a car?

If your goal is auto. It, unlike real estate, is not a vital goal. In most cases, you can wait and save. The amount, as a rule, in absolute terms is already much less.

In general, there is an opinion that the cost of a car should not exceed 50-100% of your annual income. So see if you have an excess here. I recommend living on income.

Exceptions when a loan is reasonable:

- you can buy a car on credit right now with a significant discount and benefit from the market price

- a car will rise in price in the future due to any reasons (duties, the growth of the dollar, etc.)

But you must understand that the benefit that you get when buying a car loan should be more than you pay %% and other costs on the loan.

Banks and car dealerships very competently exploit our feelings and emotions, urging us to live now, and not later. But in fact, everything is just the opposite.

You borrow other people's money for a while, but you give yours forever!

Do not fall for tricks and make a decision with a cool head. Mathematics works best here: benefit - loan costs => 0, then you can take a loan, if less, then save up or look at a cheaper option. There is always a choice, do not let your mind be manipulated.

Loan for treatment

Well, you can’t really choose here - health is more important than money, but sometimes it happens: either get into a debt loop, or lose health (or God forbid life).

I can only advise you to google on the Internet for a couple of days. Before taking out a consumer loan. Perhaps there are less expensive ways to solve your problem.

And if everything is fine with you now, then legs in hand, and buy at least accident insurance for 1-2 million rubles. It will cost several thousand rubles, but then the head will not hurt, where can I get the money? It is even better to have long-term cumulative life insurance.

How to buy household appliances and other gadgets?

Consumer credit for household appliances and trendy gadgets - definitely not! It's not worth it. Any important household appliances (gas stove, refrigerator or washing machine) can be bought used for several thousand and save money, but definitely paying a bank from 20% per annum for new appliances is crazy.

Other things will have to wait. If you don’t have money now to purchase what you want, then you haven’t earned it yet - think better about how to earn the necessary money. Ignore advertisements like: Buy an iPhone 4 on credit or buy a laptop on credit, etc. such appeals not to postpone the purchase and get into debt. Think about whether your benefit from owning the thing now (and not in a couple of months) is comparable to what you pay on the loan.

There is such a type of stimulation of consumer demand as an interest-free loan. But in fact, it is far from always interest-free.

Read my own experience of taking an interest-free loan. It was a real show! "Interest-free credit - dirty tricks." Read and think if you need this.

Loan for repairs

As a rule, the issue of a loan for repairs in an apartment is also not burning (except when you move into a new apartment where there is no repair, then this issue should be linked to the cost of acquiring housing and a joint decision should be made).

In other cases, repairs should be done as money appears or saving up for repairs and doing everything at once, as well as remembering that you need to live within your means.

Study loan

A very worthy thing, but here you need to clearly understand when after graduation you will start earning money and how realistic it is. If you study for 5-6 years without a firm confidence in employment and income level, then I would beware of such loans. Especially if parents and relatives pay, and you do not earn extra money.

If the profession is in demand and you are confident in yourself, then take it - everything will be fine with you. If you're not sure, then don't get involved. By the way, in the West, loans for education are very common, because. education is many times more expensive than ours. But it seems that almost all education in our country will become paid and expensive.

Photo: flickr.com/[email protected] 401(K) 2012Author: Ivan Zakharov "Private Correspondent"