To understand if you can and when you should borrow money is quite simple – calculate how the loan would actually impact your financial life.
Some quick questions to ask yourself:
- Can you afford to maintain the loan payments?
- What would happen to your financial situation if you lost your job?
- Do you have an emergency fund set up to weather the time gap if you did lose your job?
- What are the benefits of getting the loan, and do they outweigh the risks?
By going through this process, you will establish a risk tolerance profile for your given situation and be prepared for the negative experiences life can bring.