When we want to buy assets of higher values, then financially fending for it can be a challenge. Things like buying a House or for Children's education, or some times even for major events in life like marriage or other occasions. In such circumstances the one thought that comes to our mind is take a Loan and meet the demand. Loan is a provision which is easily available but comes at a huge cost. In 2007 me and hubby had taken a home loan, we ended up paying 60% more for our house value with the loan, which increased the overall cost of our home. In those days we had some circumstances and had no choice but to buy that home. A few months back we sold off that home and we received double the amount of what we had paid including the loan. So if I calculate in 15 years my money was only doubled. If I have to think from investment perspective it was not at all the best investment, not even a good one. But then there was no choice in those times and we had to take a decision to buy.

Some times we do not have a choice and we need that extra money, but the thing is that when we take loans our cost increases by 60% to 75% and we need to keep that in mind and understand if it is worth it or absolutely necessary to take it. When I was very young I did not calculate all of that and recklessly spent money and often took loans as well on my credit card. But then paying up was the biggest challenge, and if there is a default the interest rates will kill us and really make us suffer with heavy penalties.

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As I mature now I do understand that taking a loan should be the last last option. First of all, I believe that I should keep my expenses and demands only to a level that I can afford. If I cannot afford to send my child to the best overseas university then I need to be realistic and go ahead with what I can afford rather then taking heavy loans and then unable to pay them. There are times when even people take loans to go for a international holiday or even to buy expensive jewelry. Those kind of situations should be completely avoided, because they are not necessities of life. The desires of life are never ending but one must understand their own capacity and stay in their limits with their expenses. Nowadays it is easy to get lured and carried away with all the social media glam. People put up pictures of their extravagant holidays, family celebrations and then those who cannot afford it feel that they can also do all of this by taking loans. It is not a good idea to do such things.

Loans personally I feel are a big liability and unless one does not have the capacity to pay it and unless if it is not a must one must not take it. On a daily basis in India I receive one call from some or the other Bank or Financial Institutions asking if I want a Loan. They try to lure with some schemes, but those are all gimmicks, the real truth is these offers can never be beneficial for the ones who take it. As I said unless it is not absolutely necessary one must not get into taking Loans. Living a debt free life always gives us lot of freedom.

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