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Spending - Head Matters


2. Means of Purchasing

Let’s look at some of the advantages and disadvantages of some other forms of acquiring the things that we want or need.

a. Borrowing

You can borrow with a credit card or borrow through a bank – you can even borrow from a friend or relative. When you borrow money to buy something you want, you can get the item or service as soon as you can get the money – often right away, in the case of a credit card, or as soon as a financial institution has qualified you for a loan.

However, as we discuss in more detail in the credit course, the lender – financial institution or individual you borrow from – usually charges a fee for lending you their money, in the form of interest. If you borrow to purchase what you want you will almost always pay more for the item or service than you would have if you had paid cash.

Check out our Cost of Debt Calculator to see how much more your purchases might cost if you don’t manage your debt carefully.

Cost-of-Debt Calculator

The interest you pay on your debt can quickly become very expensive. Use this calculator to help determine just how expensive your debt has become. Enter all of your credit cards and outstanding installment loans balances. Find out how much you owe, how much interest you are scheduled to pay and how long it will take to pay it all off.

College In Colorado
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Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

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