IS IT NECESSARY TO BORROW?

Empty treasure! Empty treasury! Has become the new chorus to the economic song Nigerians have been hearing on radios, televisions and gossips. Some state governors with lots of revenue yielding infrstructures in their states have gone ahead to procure loans from various sources to pay the backlog of salaries owed her staff. Their actions may sound saintly but it brings us to the DOs and DONTs of borrowing and the need to answer the question, 'WHY SHOULD WE BORROW?'

DOs of Borrowing

1. Borrow to invest

There are times in the life of a business person when a mouth-watering deal may come up but he/she may not have all the financial muscle to seal it. At such points, it is paramount that he/she borrows to achieve the goal.

2. Mortgaging

With the rising cost of living and shrinking economy, every Nigerian should aspire to own a house; if not for anything, to cut down expenditure. Borrowing from a mortgage bank to fulfil this dream is a welcome development and highly encouraged.

3. Have a plan to payback

Having a payback plan will not only save you the shame of defaulting but also make sure that every penny borrowed justified its purpose. We all know how ugly it gets for some people when it comes to payback. Some lose their collateral.

4. Borrow from Yourself

Dont make it a habit to always look left or right when faced with financial challenge. Look for the things you have which are not of much importance and sell them off. Once a guy approached me that he is stranded and wants to travel to his village and needs little money. I weighed him with my eyes and his wrist watch was worth more than I wore. I shook my head and told him that I dont have money.

DONTs of Borrowing

1. Level up

You wont believe some of the awkward reasons that make people stretch out their hands insearch for aid; buy exortic cars, change wardrobe, impress women, pay for a drink etc. If you are one of these, please have a rethink. Any borrowed money without the potential of bringing in money should be discouraged.

2. Borrow just the amount you need.

Out of greed, some people will ask for much more than they need. The excess is wasted and when it comes to repayment, they cant account for the excess.

3. Borrowing without a concrete financial plan.

Some people indulge in impulsive borrowing. They borrow without knowing what they want to do with it and when the money gets into their hands, they are confused as to what next. A good financial plan should encompass all the intended expenditures and incomes and map out a time frame to start paying back.

With this new idea in mind, do you think our governors are justified in their borrowing?