Published in El Pais, 21 July 2018.
We are mortal, the flesh is weak and resisting temptation is not easy for most people. Also, most of us know that we have to save money for an emergency, our retirement, or for something else like the creation of your own company. But the temptation to buy something is much more interesting for people than to save and sleep peacefully or be happier with your own company.
But there is a serious threat to saving and these are the credits. Nowadays we want everything now and immediately. We no longer want to wait and save for the new TV, car, house, vacation etc. We want everything now. If it was a loan to start a business, it is different, but many times people take a loan to buy small things and due to their impatience, they are not able to not save. Many people do not want to save and are willing to pay high interests.
When they are relatively small amounts we think that it will be easy to pay. An example, when one buys a $ 4000 super-TV and they give you a credit for 2 years at 15% annual interest, the amount we have to pay each month is $ 194. If we multiply it by 24 months we realize that we have paid $ 4655 instead of $ 4000. Maybe you will say that $ 194 a month is worth it to speed up the purchase and enjoy it more before. Maybe you are right. The danger is when we start making more purchases and having more debts and the 194 a month changes to 300 and then to 400 until it really starts affecting the amount of money that we have left for the basic expenses each month.
If we add the risk of being unemployed, it can even lead to the situation that that we cannot pay interest, amortization, or daily bread anymore. This should stress the importance of good financial administration in daily life to people. You have to consider your income, your expenses, your debts, your savings of you and your family to make a correct loan decision.
On the contrary, if you save with the objective of having a safety net for emergencies, your retirement, the purchase of a TV, or to start your business; you are in control and you will not be submitted to the interests of greedy banks for your personal loans. Maybe you need some patience to save and you have to resist the temptation, but in the end, you sleep peacefully without worrying about how to pay the monthly payments to the bank.
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