Finance | When to borrow

I went in Matalan yesterday and looked at the clothes. I was going to buy a straw hat for the summer but they weren’t quite what I wanted. They had the hats and sunglasses on offer, both for £8.00. I can’t wear the sunglasses though because mine are prescription. I didn’t buy anything in the end but we were out of the rain and using their heating and not mine! I do know some people who would have bought a lot of clothes they don’t need and paid with their credit card. This is essentially borrowing money to buy stuff that you don’t need.

So when is it wise to borrow money? I would only borrow if I am going to invest it. It would be a good idea to borrow to buy a house, it gives you a place to live and property tends to go up in value. Even putting food on your credit card for a very short period, could be wise, if you’re stocking up. Then you can  make the most of cut prices; especially if you pay the credit card off and not incur any interest.

If you are investing in a business it might be useful to borrow some of the money, because that too would be an investment. There are many different kinds of investment. Students borrow to fund their education and see that as an investment in the future. This poses a question. Should we borrow to invest when times are hard or should we borrow to spend when times are good? The government in the UK is being urged to borrow to invest in new schools and hospitals because times are hard for the economy; this would be an investment in  the future. This would create building jobs and help bring the economy out of recession. The problem is, when times were good, the government should have saved money rather than spend it on trivia. It’s easy to waste money on pet schemes when we think we are well off; but we should save for those rainy days. The government tends to think that billions spent on the Olympics is money well spent, because it attracts tourists. That increased tourism also adds to climate change with all the additional travel and so it is spending on the trivial. The same applies to the arts and what is often seen as ‘culture’. We tend to show off with fancy clothes and gadgets and governments like to do the same when times are good. They get in ‘consultants’ to advise on pet projects and then order expensive computer systems or invest in something grandiose to ‘show off’. This kind of behaviour makes them popular in the short term, but not so much now the debts have to be paid. Even wars started by governments can be for vain reasons as they show off their power. When the war is over and they have spent hundred of billions they try to convince us things are better. Individuals show off with expensive cars and homes; politicians do the same, but use someone else’s money. Everything has to be grandiose, to show off their power. The political equivalent of keeping up with the Joneses is trying to compete with other nations and this has resulted in war, the cold war and the space race. We can learn from this and not be envious of our neighbours and only ever borrow to invest; not for our day to day living expenses.

Even putting seeds and plants on your credit card could be seen as an investment if you intend to grow food through the summer. Buying a multi purpose vehicle that can be used to make money could be an investment and worth considering rather than buying a car too. Tools can also be a good investment if they will help you make money or even save money. There are many ‘alternative’ investments that can be considered and possibly borrowing to fund them can be a good thing to do. It’s better than spending on depreciating goods that won’t make or save you money.

There are more amazing blogs on the Home Page. Can you think of another ‘alternative’ investment? Please comment.

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