“I need a loan now“… should say no one ever!
We need a loan now, do we?
So here we are.
You are in a situation where you need to come up with some cash rather urgently.
Your back is up against the wall. You have limited (or no funds) in your bank account. You don’t get your next paycheck for another two weeks. You have a serious situation on your hands, that requires you to cough up some dough… It could be the mortgage company or the landlord threatening foreclosure or eviction for nonpayment of your monthly housing payment. It could be an urgent home repair that needs immediate attention that cannot afford to wait. It could be a breakdown of your vehicle, without which you would not be able to commute to work or to school.
Whatever the case may be, you don’t have the money.
You have no prospects for a lucky windfall of cash anytime soon. Being broke and depressed, you don’t know what to do.
You have exhausted all resources.
So quite naturally, the thought “I need a loan now” has inevitably crossed your mind.
That’s right! You read correctly. If you tell me “I need a loan now”, I would unequivocally, absolutely tell you that you do not need a loan now.
If you think I’m being absolutely bonkers, and that I have no idea what I’m talking about, and that I don’t know the situation you are going through, and that I haven’t walked the mile that you have, then you are more than welcome to click on the back button on this article, and continue searching up and down the next or previous links in Google for the search term that brought you to this page in the first place.
There are umpteen-million websites that will sell you a loan, will sell you hope on how to get a loan, whether you have spotless credit with nary a blemish, or whether your credit is so deep in the gutter they would need a scuba diver to rescue it! But that is fine. You keep telling yourself “I need a loan now”. Best of luck to you.
But I’m here to tell you that you do not need a loan now. Actually, let me qualify that by telling you that you do not even want a loan now. In fact, the last thing you would ever want to do is get a loan.
Trust me when I tell you that taking out a loan will only make your situation worse. You may not see it now. But if you read on, I will make it as plain as day for you to understand why you do not need a loan now. In fact, I will even show you how to resolve your current financial conundrum without getting out loan.
Okay. So if you haven’t clicked on the back button yet and you have read this far, then congratulations! You are about to receive some unconventional advice that you might not find on other websites. I’m not here to peddle a loan product. Payday loans, auto loans, secured loans, home equity loans, credit cards, and personal loans are all nothing but financial traps. Read on to learn why.
What’s the difference between a banker and a baker? Both are in business. Both are in the business of creating a product and selling it. And both are in the business of selling. If you don’t buy their product, they don’t make money.
In order to entice you to buy their product, they will try to convince you that you need it. Nobody needs bread. While there is the old adage that “man cannot live on bread and water alone”, that is actually not true! Man cannot live a quality life on bread. Bread has actually been proven to be bad for you. It’s not a natural food. It is a processed food.
Bread must rise and there must a lot of fluff in order for it to have its appeal.
Humans need to eat whole, natural foods. But I digress. This article is not about bread, and I am not a nutritionist.
The point I was trying to make is that loans are the same way. In order to make a loan attractive, bankers have to fluff it up, and make it look appealing. They will advertise it with nice, low, affordable monthly payments that seem like they will fit in your budget. They will tout all of the benefits of having a loan and how it will help you achieve your short-term or long-term goals. It is in their best interests to indoctrinate you with the mantra: “I need a loan now”.
On the contrary, you need to be telling yourself: “I need a loan now, like a human needs a viral infection”. Loans are like viral infections, nay, they are like cancers! Once they infect you, they will eat away your financial prosperity from within!
Have you ever heard of the term “loan shark”? According to “Google Define”, a loan shark is a moneylender who charges extremely high rates of interest, typically under illegal conditions. But what is considered “extremely high”? Well, that’s all subjective.
How about if I were to tell you that anything above zero percent is considered “too high”? That’s right! Anything about zero percent is too high. Any loan that charges you interest is a loan you should run far, far, far away from. You need to run to a galaxy far, far away.
This sounds so easy, right? For a mere $125 per month, you get to take care of that $5,000 car repair, or you get to buy that used car, or you get to finance that vacation? $125 hardly seems to make a dent in your budget, right? And in your mind, you could probably rationalize and visualize yourself as being able to effortlessly make more than the minimum payment every month? How about $150 per month? Or better yet, even $200 a month, to help pay down the debt early?
You have convinced yourself that you will not only be able to easily afford the minimum monthly payments, but that you will also be able to make more than the minimum monthly payments at some point in the future, when you know that you might be able to earn a raise, get that bonus from work, or be able to get a better paying job someday.
So how does a banker earn money if they are lending it to you and you are merely paying it back? The answer is simple: They are earning interest. They are earning extra money back on top of what you had originally borrowed.
They do this in such a way that the average person might be complacent and blissfully unaware of just how much the bank is actually robbing you of your money.
Referring back to that $150 per month example above, on a $5,000 loan, to be repaid over 60 months. Have you done the math? If you were to divide up $5,000 into 60 months, that’s only $83 per month. So why on earth are you paying a whopping $150 per month, which is nearly double the monthly payment required in order to repay the loan in 60 months?
The answer is simple: Interest. (And interest isn’t exactly that simple. Read on to learn more about interest.)
The banking industry is playing the consumer market for a long con game. They make you feel like you are getting a good deal by offering such generous repayment terms, but when you add up the total amount you would actually be paying over the life of the loan, if you were to only make the minimum monthly payments plus interest, the total amount you would actually paying is staggering. So when you think to yourself “I need a loan now“, banks are able to pretty up the loan to make it look innocuous and harmless, by wrapping it up in a proverbial gift-wrap and bow, to in fact make it look attractive.
Using the example above, you would end up paying a mind-boggling grand total of $9,000 over the course of the life of the loan, after 60 months!
When you look at it in terms of the monthly outlay, $150 doesn’t seem so bad. But when you think about the total cost over the course of time, you are repaying nearly double the actual amount of the loan.
You have betrayed and crippled your future, for the sake of the short-term.
For every problem, there is a cure. For every malady there is a medicine. But not all medicines are necessarily good for you. Many medicines today are marketed with little disclaimers in the fine print. These disclaimers tell you that erstwhile you may be experience temporary relief from the symptoms of whatever ailment you have come down with, you may experience some undesirable side-effects in the process (such as nausea, blurred vision, drowsiness, loss of appetite, or what have you).
Well, interest-bearing loans are simply bad medicine for your financial net worth. While they may provide temporary relief from whatever financial predicament you are in, they do come with some nasty side-effects (which fortunately, at the time of this writing, government agencies are required to provide full disclosure of just how much interest you would be paying and for how long):
You will be stuck repaying the loan for many years. Long after your life circumstances may have changed, you will still be making payments on that loan.
You will be paying back way more money than you had originally borrowed, making it an extremely costly and expensive purchase that you had financed.
If you are unable to make the payments at any time, you run the risk of hurting your credit rating. (More on that later; that is a whole separate topic to be discussed in another article).
Your budget will be tied up for the long-term, with a reduced cash-flow.
So you have to do some serious soul-searching and financial planning before taking out any loan. Next time you find yourself mulling over whether “I need a loan now, you need to sit down and do the math and see how taking out this loan will affect your long-term future, not just your short-term future.
What is the point of bartering away your long-term freedom, handicapping your financial mobility, and creating even more stress for yourself, enjoying short-term benefits by effectively bartering away your long-term freedom?
Debt is a form of slavery.
There. I said it.
Are you wincing at the previous statement?
Do you feel it is too harsh?
Do you think it is a an overzealous mischaracterization of what debt is?
Are you saying to yourself “there is no comparison between actual human slavery versus being financially mired in debt”.
If you are coming to the defense of debt, then you may need someone to put things into perspective for you. And that, my friend, is the purpose of this blog. We are here to open your eyes, to take the proverbial red pill to see just how far down the rabbit hole goes – to quote Morpheus, from The Matrix.
(We could draw an analogy between The Matrix and debt slavery, but that would take us on a whole other tangent. That is a whole other article for another day!)
Getting an interest-bearing loan is akin to masochism.
Taking out a loan is akin to handling a loaded gun. If you are not careful with it, you could end up with a self-inflicted wound, which would subject you to serious fiscal distress for years, or decades to come. It would have a domino effect on the rest of your financial life. So that is why I am here to tell you that if you are telling yourself “I need a loan now“, then you need to quiet all the noise and all the ruckus that that inner voice is telling you, pulling you toward the trap of instant gratification…. There is no denying the fact that taking out a loan is the easy way out. You may enjoy the relief or the luxury you attain, for a little while. But you will pay for it with an arm and a leg later.
So if you need money now, why do you need to borrow it?
Why do I need a loan now? Why not earn it instead?
Ok… So have I struck a nerve with you, dear reader? Did you just hear me tell you that you need to earn more money now, instead of taking out a loan?
The answer is an unresounding, absolutely unequivocal, indisputable YES.
Shifting your mindset from a paradigm of borrowing money to one of earning money can be quite harrowing and daunting, and might be a difficult concept to wrap your head around.
But when you think about it, it makes complete sense.
Let me explain.
When it comes to the questions of how you can quickly earn the money you need, instead of simply taking the easy way out and getting out a loan, you need to start by asking yourself the following questions:
If you are experiencing a life or death situation, and there is absolutely no alternative for you to save your or a loved one’s life, you will become homeless and impoverished to the point where it will wreak physical or psychological trauma on yourself or your loved ones, then you may need to consider taking out a loan. In a circumstance like this, it makes sense to put off your problems, so that you can live again another day. So don’t get me wrong. I’m not advocating that you should allow yourself to be put in harm’s way for the sake of avoiding taking out a loan. If your intuition is telling you “I need a loan now”, in order to avert a traumatic calamity due to some kind of emergency, then that is something you may need to consider, as the “lesser evil”.
The aim of this article is to open you up to the possibility of facing your worst fears, picking yourself up by your bootstraps, and coming out stronger than before. But the amount of financial setback or physical hardship, adversity, and austerity you would have to endure by forgoing a loan in favor of waiting until you have earned the money, is dependent on your tolerance for risk aversion and your willingness to go through the process of delayed gratification for the long-term good. In other words, your mileage may vary.
The contents of this article nor the contents of this website constitute professional or legal advice. You should do your own research. We are not held responsible for any loss or gain you may incur as a result of following any of the advice in this blog. If you are completely strapped for cash, here is some advice on what to do if you are broke.
Don’t take out student loans. They are a trap. It may seem like a catch-22: We are told that in order to make money you need to go to college. But in order to go to college, you need money. And if you don’t have the money to go to college, we are generously offered student loans.
Why? Because student loans are big business. In fact, did you know that student loans are exempt from bankruptcy? Yes, you read that correctly! Even if you were to ever file for bankruptcy, you are not off the hook from repaying your student loans! The student loan companies want you to take out loans and keep you in debt for the first fifteen years after you graduate, with a financial handicap – a handicap that will keep you from being able to get the financial head start that you need upon graduation.
So my advice would be to either seek out a career or profession that doesn’t require you to get a college degree, or to settle for a state college in lieu of an overpriced Ivy League school, or go to a community college for the first two years.
You could also look into paying your way through school by working a part-time job on the side, while you are attending classes, while staying home with your parents.
If you have to take out a loan in order to buy a home, then you shouldn’t buy it. The government peddles this idea that you will save money in taxes by buying a home and making the mortgage interest and property tax payments. While it is true that you may get a tax deduction for these, has it ever occurred to you that the true cost of owning a home far exceeds any financial benefit you might realize through tax savings?
You have to pay interest on your loan. If you are taking out a $100,000 mortgage, are you really paying back $100,000 over the course of 30 years?
Are you ready for this? Would you like to know how much you actually end up paying on your mortgage, in total?
You are paying $82,406 in interest!
That means you are actually paying back $182,406 in total! You are actually paying back 82% more than what you originally borrowed!
Sounds like a rip-off doesn’t it? Well, your banker doesn’t think so! The bank loves you! You are making them rich, while they are making you poor!
And then you are paying for all of your home repairs, home-owners’ insurance, upgrades, and property taxes. And if you have put less than 20% of the home’s value as your down payment, then you are also paying PMI (private mortgage insurance) every month.
As you can see, the costs add up. Home ownership is an expensive proposition, and is not necessarily an investment that pays dividends in your lifetime. That is a popular and common misconception, propagated during the era of the housing bubble of the early 21st century, before it burst.
Unfortunately, our society is dependent on automobiles… unless you are fortunate enough to live in a major city where every place you would ever need to go is accessible via public transportation, a car is a must.
Therefore, car loan companies and car dealerships aggressively market their products, to get consumers like you and me to get stuck into multi-year loans in order to enjoy the privileges of being able to get from point A to point B, at will.
But what can we do? It seems as though taking out a loan in order to purchase a brand-new car is seemingly unavoidable, right?
Who says you need to finance a brand-new $30,000 car? Why not buy one used, for a much better price? Why not plan ahead for a vehicle purchase and start putting money away for it?
If you fear that it would take a you a lifetime to be able to save up money to buy an expensive car, can you manage with a smaller, less expensive one… one that is only $5,000 perhaps?
Would it be better to buy a $5,000 vehicle, paid in full, in cash now, which you know will last you for a few a few years, while you start earning the extra income?
Or would you be better off saving up the money to be able to purchase a more expensive car later?
If you have a big family and absolutely must buy a bigger car, then what can you do to minimize the cost of the car, so that you can finance a lower amount?
Could you buy two smaller cars, one for you and one for your spouse, for less than the cost of one large car?
Can you carpool with someone to work?
Can you get a job that allows you to telecommute or start a business that allows you to work from home?
As you can see, there are many creative alternatives you can explore, as opposed to taking out a loan, or which can help you minimize the amount of money that you would have to borrow and repay over the course of time.
Also keep in mind that when you take out a car loan, just like a mortgage, you will end repaying thousands of dollars more than what you borrowed, thanks to interest. Unfortunately, cars depreciate in value over time. Therefore, selling a car later will net you less money than if you were to sell a house later.
As you can see, if you find yourself thinking “I need a loan now“, that is not an inevitability. You just need to think outside of the box!
You may have heard the expression “comfort zone” before.
Surely, with difficulty there comes ease. Sometimes you have to travel the uphill road in order to achieve greater success.
Laziness, complacency, and just trying to remain within the confines, safety, and bubble of your comfort zone are seldom the key ingredients to success.
Success comes with struggle, hardship, expanding beyond your comfort zone, and the willingness to take risks. It seldom comes through maintaining status quo and “playing it safe”, and never taking any risks.
How much discomfort and risk can you tolerate is entirely subjective. It is a matter which you need to learn to explore on your own. Nobody can tell you how much pain, inconvenience, and hardship you should be willing to put up with today, in order to secure a better tomorrow.
If you lose your house to foreclosure today, will you have a safe place to relocate to, for the short term, while you attempt to rebuild your life? If so, would it be worth it to tough it out for the short term, and rebuild your financial life without taking out a loan? Or would it be better for you to bury yourself deeper into the vicious cycle of debt by taking out a loan, while continuing to maintain your current house?
Would it be better for you to get a second job at night that pays you more money? Or would it be better for you to take out a loan where you now have less room in your monthly discretionary spending budget, because you are now beholden to repaying off another loan?
Contemplate over the answers to these questions. Is the only solution to my immediate problems that I need a loan now? Or is there a better way?
Earn more money.
It’s really that simple. If you could earn more money, you wouldn’t need to borrow it, would you?
But how do you earn more money?
The most obvious answers that come to mind might be to either get a second job or to look for a better-paying job.
But these are not necessarily the best answers!
The best answer is to establish a second stream of income. If your primary day job is your sole stream of income, then you need to work on establishing a second stream.
Have you ever heard the expression “do not put all of your eggs in one basket”?
You should not be depending on your regular day job as your sole source of income. You should have multiple sources of income.
Now obviously, you cannot work two jobs simultaneously. And your personal life situation may not allow you to work two jobs back to back, for sixteen hours a day. And that may especially be true if you have family commitments.
But what you can do is start developing passive streams of income.
Passive income is that which you earn on autopilot, on a residual or recurring basis, without you having to actively perform an action in order to earn money now.
With active income, the minute you stop working, you stop making money.
With passive income, you have to do some work up front or occasionally to get a system in place and keep it running. But then the money comes rolling in, unattended.
Examples of active income include any type of work where you get paid by the hour.
Examples of passive income include publishing books, selling products online through Amazon, making affiliate commissions online through a blog.
The answer should be “No, I can make as much money as I need. As often as I want. Whenever I need it”.
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