How to become an attractive borrower who doesn’t cause a debt crisis in your home
Most South Africans inevitably get to a point in life where they face a financial shortfall and are thus forced to become a borrower as a temporary solution. While you won’t be judged for borrowing money, your payment activities reveal a lot about your habits and your personality. You can’t foresee what unexpected financial events will happen to you in the next few years, but there are some things you can control: planning your finances and setting up a worthwhile goal.
Read on below for 4 essential qualities that make up a good borrower
1. Timely repayments
A good borrower is one that knows what their debt obligations are, they are responsible enough to pay on or before their due dates, without having to be reminded. Timeliness is a precious quality, not just in debt repayment. Punctual persons are committed to their goals and are intent on completing their tasks, rather than rushing within the last few minutes. These people are more likely to succeed in their financial goals and in life.
2. Good money management skills
This includes a solid understanding of your cash flow and the ability to live within your means. The skill of keeping accurate and timely financial records is vital for obtaining a loan as banks and other lenders will require not just proof of income, but proof of residence, marriage, and in some cases, ownership of assets.
3. A sense of frugality
Good borrowers don’t bite off more than they can chew. They only borrow what they can repay and know whom they borrowed from. Most borrowers are not done in by the size of their debts, but by the sheer number of them, they get loans from too many sources and then juggle money to repay creditors. Ideally, one borrows from a single source at a time.
4. Purposeful spending
Perhaps one of the best indicators of a successful borrower is what you ultimately do with the extra cash at hand: is it going to provide you with greater value, or is it going to burn a bigger hole in your pocket? Thus, you must be clear about your financial goal: borrowing to take care of an unexpected expense or the purchase of a once-off big-ticket item such as a house or a car.