Most of us have heard adverts on TV or radio, social media that before borrowing online loans, think about your possibilities to repay. These words have been said and written hundreds of times. But how does it apply to financial distress? It can reflect on it hugely if you don’t know how to control your finances. We will talk about how to manage money, leisure spending and borrowing in multiple places at once. If you are interested, keep on reading!
But first, what is the financial distress effect? For short, it is a conscious or unconscious mental behaviour where you spend or borrow because of underlying internal financial pressure, society or others around you.
For people who have a hard time to manage their finances are likely to fall into financial distress. It can apply for people who are spending too much money on particular products, activities which perhaps aren’t urgent to have.
The way to get out of this loop is by putting down your budget and seeing how much you have and how you can work with it for your financial benefit.
Put it down on paper or budgeting apps and put your main expenses into sectors. That way you have boundaries for each area of your life, for example:
- Rent, mortgage, utility bills
- Hygiene products
- Leisure time (going out, travelling, shopping) etc
Our main advice is don’t live over your budget!
Leisure spending can be nice but to a certain extent! It can start to get dangerous if you don’t know how to stop.
As we talked about budgeting and putting your finances into sectors, one of them has to be Leisure time. Worth to mention, it should be at the bottom of your list if your income is smaller as it is not as important as paying your bills, for example.
We are not saying that you cannot have fun or shouldn’t treat yourself with anything. You sure can! But with the mind.
Spending habits correlate with pressure from society or people that you are friends with. How? You see what is popular or “cool”. What others have or they do – and you don’t want to fall back. Which is understandable! But it isn’t worth getting in spiralling debts and stressing about everything. Right? So it’s better to step back and think about what these actions can do to you.
Also, worth mentioning, when people seek out for an online loan, there has to be a serious reason behind it as it is not created for unnecessary purchases.
Borrowing multiple online loans at once
Borrowing from multiple lenders can be dangerous and can go quickly out of hands.
The borrower has to be sure about their decision before applying. It is alright to have one or two online loans if the reasoning behind these choices is severe.
But if the online loans are an option for a shopping spree or having a good time, it’s not the right choice for it. Customers who are in these shoes most likely will suffer from spiralling down in the financial struggles which can bring financial worries to a person’s life.
Let’s just put it this way, if a loan has been borrowed because of lack of income. Next month there is not going to be that extra money to cover it most likely. And here starts a snowball effect where a customer needs more money to repay the borrowed loan from the last month. If you see the pattern, it is going to repeat itself month after month, until there is no place to borrow or no online loan company which would accept clients’ applications as they see their borrowing history.
Now when the customer has many loans from multiple lenders, the awful financial situation has synced in, and there is no way out of it. Unless the customer’s income becomes higher, which could potentially save the situation.
What can the customer do in this situation? The best option is to combine the majority of the loans and make a repayment schedule with an amount the customer can easily repay every month. And of course, the customer has to stay away from the loans until they are back on their feet.
Overall, use online loans when there is no other option and bear in mind that you have to be ready to repay it next month. Otherwise, it can end badly and haunt you for a good time which no one wants.
Keep in mind the tips we shared and be smart with your finances. Everything is safe while you keep it in control.