FINANCIAL MELTDOWN

FINANCIAL MELTDOWN

 Financial Meltdown is caused by the financial exuberance of people and the lenders of money.

The people's contribution is the irresistable urge to borrow to buy.

The lenders of money are driven by the irresistable urge to lend money to people and organisations so that they can enjoy the fruits of their profits generated by the interest charges.

However some borrowers due to their exuberance, over borrow and renege on their commitments to maintain their payments.

Borrowers should think twice before commiting themselves to credit purchases as credit purchasing diminishes the amount of goods or services they can buy with a given amount of money.

EXAMPLE:    

A person wants to buy clothing and groceries to the cash value of R100-00 or 100 dollars or whatever currency he or she uses.

By paying cash there is no further commitment.

By using the credit option the buyer has to pay the cash price plus the 20% or whatever interest is payable. The interest is the additional amount one has to pay for instant possession when one does not have the cash amount.  

It is thus obvious that  buying with borrowed money decreases the amount of goods and services one can obtain over a given period.

To most of us buying a home and or a motor vehicle is a must because of our inability to pay cash for such expensive items, but all of us should, if possible, consider paying cash for necessities such as food, clothing and other items that are within our means.

CREDIT IS A COSTLY SERVICE AVOID IT IF YOU CAN.

SIDNEY WILLIAMS

 

FINANCIAL MELTDOWN