Borrow Wisely

The sensible use of debt should be part of any sound financial strategy. Debt can enable you to enjoy things that otherwise are beyond your current reach. Borrowing can also have its ugly side. A few guidelines can help you feel comfortable with your credit use.

The basics

Borrowing costs money. That isn't necessarily bad. It just means that when you pay it back, you have to pay more than you borrowed. The components of a good debt strategy are quite simple:

    >> Choose when and what to borrow for carefully.
    >> Never borrow what you can't repay and live up to your repayment responsibilities.
    >> Periodically review your debt. Refinancing your mortgage or auto loan may save you money.
    >> Reserve some borrowing capacity for emergencies.
    >> Never borrow for a luxury if you can't afford the necessities.

Prioritize borrowing based on long-term value

  1. College education
  2. Housing
  3. True necessities
  4. Autos
  5. Major furniture purchases
  6. Vacations
  7. Expensive jewelry rarely worn

The importance of a good credit record

A good credit record does more than just make future credit approval easier to get. Most lenders use your credit record to determine credit limits and what rates to charge. A good credit record will save you money.

Find the best interest rate and terms, based on your needs and wants

Comparing credit cards can be confusing. You have to consider interest rates, fees and associated benefits. The right card for you should reflect how you use it. If you pay the full balance monthly, the interest rate is of little concern. Focus on any annual fee and benefits. If you carry over balances, the interest rate should be a top concern.

The "right mortgage" for you should balance interest rate, length, and down payment requirements that fit your situation. Adjustable rate mortgages usually have lower rates, but your payments may increase. If an increase in monthly payments would be too painful, look at a fixed rate mortgage or an adjustable one with rate adjustment limits. A Starion Financial mortgage lender can help determine the best financing terms based on how long you plan to stay in your home and other criteria.

Starion Financial has other lending options available, including home equity loans and lines of credit, or consumer loans for automobiles, boats, motorcycles, RVs or other expenses. Contact your nearest Starion Financial location and let us know how we can help you with your borrowing needs.

Summary

By being conservative in your use of borrowing, you can help you take control of your financial future. Borrowing for the right reasons and living up to your repayment responsibilities can make borrowing a useful financial tool.