The great majority of people look at their budget when taking out a home mortgage or auto loan, but what about a short-term auto title loan? Do you consider your finances, regular debts and household budget when you are preparing to take a loan against the collateral of your auto?
Often times auto title loans are taken when a borrower must have fast money for emergencies or unexpected costs. This does not leave much time to consider the impact repaying your loan will have on your financial position and checking account. Taking some time to think about whether you will be able to afford re-paying the loan, if it'll seriously influence your budget, and what you will do should you go into arrears on your payments, may be the decisive factor in whether your position can survive an auto title loan.
Budgeting isn't easy for everybody but most finance gurus will agree; making a budget is one of the smartest things that can be done for yourself and your money. The concept of putting your expenses into categories might be a bit dismaying but with time you can see exactly where your money goes, how much you spend, and how much you could probably be saving.
Before you take out an auto title loan, consider taking a look at your financial position to make certain you are able to afford to pay your loan back. If you have yet to form a budget for your expenses, consider these steps to help get your financial affairs in order:
1) Save for retirement - Setting aside for your future has got to be a concern if you'd like to be well placed to retirement and luxuriate in the fruits of your work. Retirement websites and budgeting books will help you know how much you want to save for retirement. Look at your revenue and costs and decide what quantity of your total revenue you wish to set aside for the future. Consider your age, your portfolio balance (stocks, annuities, for example.) if any, and the amount of years till you retire. Most financial experts suggest saving 10%-20% of your gross yearly salary. Check with your employer's human resources dep. about the options of a 410 (k) or 403 (b). Remember, if you take out an auto title loan and decide to repay it out of your retirement fund, you will be penalized.
2) Set a goal - Make a promise to set aside part of your monthly revenue for an emergency fund, holiday or something you want to buy in the future. The key is getting into a bit of a habit of setting something apart, instead of spending. If you can get yourself in a good, steady routine, you may be able to avoid taking out a car title loan because you will already have the money you need to have in a savings.
3) Track your costs - Look at six months of bank records and/or receipts and add up the amounts. Then divide by six to get a median for what you spend each month. This'll help you see where your money goes and regardless of whether you are living within your means. If the average is rather more than what you bring back home in income, this is red flag. You will need to look at your expenditure and work out where you can make cuts. If the average amount is less than what you bring back home, you can still make cuts in certain spending categories and add to your "savings" category.
4) Make it automated - Set up an automated move to your savings account so that money will be taken out on a monthly basis. This way you will not get tempted to spend that money on something else.
Often times auto title loans are taken when a borrower must have fast money for emergencies or unexpected costs. This does not leave much time to consider the impact repaying your loan will have on your financial position and checking account. Taking some time to think about whether you will be able to afford re-paying the loan, if it'll seriously influence your budget, and what you will do should you go into arrears on your payments, may be the decisive factor in whether your position can survive an auto title loan.
Budgeting isn't easy for everybody but most finance gurus will agree; making a budget is one of the smartest things that can be done for yourself and your money. The concept of putting your expenses into categories might be a bit dismaying but with time you can see exactly where your money goes, how much you spend, and how much you could probably be saving.
Before you take out an auto title loan, consider taking a look at your financial position to make certain you are able to afford to pay your loan back. If you have yet to form a budget for your expenses, consider these steps to help get your financial affairs in order:
1) Save for retirement - Setting aside for your future has got to be a concern if you'd like to be well placed to retirement and luxuriate in the fruits of your work. Retirement websites and budgeting books will help you know how much you want to save for retirement. Look at your revenue and costs and decide what quantity of your total revenue you wish to set aside for the future. Consider your age, your portfolio balance (stocks, annuities, for example.) if any, and the amount of years till you retire. Most financial experts suggest saving 10%-20% of your gross yearly salary. Check with your employer's human resources dep. about the options of a 410 (k) or 403 (b). Remember, if you take out an auto title loan and decide to repay it out of your retirement fund, you will be penalized.
2) Set a goal - Make a promise to set aside part of your monthly revenue for an emergency fund, holiday or something you want to buy in the future. The key is getting into a bit of a habit of setting something apart, instead of spending. If you can get yourself in a good, steady routine, you may be able to avoid taking out a car title loan because you will already have the money you need to have in a savings.
3) Track your costs - Look at six months of bank records and/or receipts and add up the amounts. Then divide by six to get a median for what you spend each month. This'll help you see where your money goes and regardless of whether you are living within your means. If the average is rather more than what you bring back home in income, this is red flag. You will need to look at your expenditure and work out where you can make cuts. If the average amount is less than what you bring back home, you can still make cuts in certain spending categories and add to your "savings" category.
4) Make it automated - Set up an automated move to your savings account so that money will be taken out on a monthly basis. This way you will not get tempted to spend that money on something else.
About the Author:
Mark Venite is the author of this draft and a successful financial advisor with 20 years of expertise. He helps people to become approved for bad credit foreigner loan as well as financial planning.
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