photo credit: TheTruthAboutMortgage.com

Bankrate published a good article on the do’s and don’ts of borrowing.  Below are their tips along with my thoughts on each.

• Save money while repaying debt - I agree with this one.  I believe it’s important to build or maintain a mini emergency fund of at least $1000 while in debt.  This way, you can deal with unexpected expenses without having to incur more debt.
• Find the best interest rate - Just like all money isn’t good money, all loans aren’t good loans.  Paying high interest rates can double or even triple the amount you spend to pay off your debt.  While you should avoid debt as much as possible, seek out the lowest interest rates if you do take on debt.
• Read the fine print - Many people complain about the ‘tricks’ or dirty tactics that credit card companies employ.  However, all the details are right there in the fine print that you signed when you made the credit application.  If you can’t be troubled to read, or if you don’t understand, the details, perhaps you should reconsider applying for credit.
• Pay on time every time - It’s very important to make all your payments and on time.  If not, those low interest rates you searched for can go out the door.  Now many credit cards have ‘universal default’ stipulations.  This means you can be penalized by Card A for making a late payment on Card B.  If you don’t think you’ll be able to make the payments, avoid the debt!
• Borrowed money is not free money - ‘Available credit’ isn’t a license to spend.  Just because a company is willing to LOAN (not give) you money doesn’t mean you have to take it.  Remember, creditors are willing to loan you money for their own benefit, not yours.
• Don’t borrow frivilously - If it isn’t a house, perhaps an education or a car or some other DIRE need (like emergency medical care, not shopping, not dining out), then you shouldn’t borrow for it.  Having to borrow is a sign that you can’t afford it.

These are just a few of the tips in the Bankrate article.  Be sure to check out the article for the rest.  How are you doing in regard to making good decisions when it comes to borrowing?