Sometimes Loans are Wise Investments

I found myself in thousands of dollars of student loan debt when I finished college. I had no money, yet I needed everything necessary to start a new life. As soon as I acquired employment I went to a car dealership to find a new car to lease since it was necessary for me to have a vehicle for transportation because I lived in a city that had poor mass transportation. At first I wanted to purchase a car, but I looked at the price tags and knew that I couldn't possibly afford to buy, so I decided to lease. My lease would be for 36 months at $199 monthly. Little did I know that car insurance companies love to gouge young drivers, since I had never owned a car before. My car insurance was another $189 monthly.

Once I had my transportation set up I spent my days going to work and driving around town looking for a place to call my own. I had been living with my parents all through college and was still staying with them. Now that I was college graduate I had to get out on my own before I lost my sanity. After a few short weeks of looking at apartment after apartment and house after house I found the perfect home to rent.

The rent would be $1300 monthly, but it was a gorgeous home with a swimming pool in the backyard and a garage to park my new car in. I was the happiest person on the planet.

I vividly remember sitting down with my bills on a Friday night, trying to figure out what had to be paid now and what could wait until my next paycheck. I realized that I was still in heaps of student loan debt and had no investments. I decided to promptly change that.

The very next morning I saw a real estate agent and discussed the concept of purchasing a home. Because of the massive amount of student loans I had, I thought that loans were bad things. I thought that loans should be avoided at all costs. The real estate agent completely changed my mind.

She explained to me that every month I was spending $1300 on rent. I was giving this money to my landlord and would never get anything for it when the month was over. She explained that instead of renting a home and paying my landlord each month, I could purchase a home and pay my mortgage company each month. The difference in those two scenarios is that in the former I end up with absolutely, positively nothing after forty years. In the latter scenario, I own a home in forty years. I realized that in this case, at least, a loan was a wise investment.

My real estate agent referred me to an excellent mortgage broker and we discussed what I could afford based on my salary and other debts. We decided that I should be looking in the market of about $150,000 for a home to have payments that I could afford.

My real estate agent and I looked around for the perfect home for several months. Eventually, we found the perfect home that I fell in love with. We made an offer to the seller and closed on the home within a month. Taking out the mortgage loan was the best thing I ever did.

Shortly after closing on my home I realized that I should stop leasing my car. I started to see that leasing my car was the same poor investment that renting my home was. I promptly took my leased car to the dealership and started looking around for the perfect car.

I found one that I absolutely adored and inquired about obtaining a car loan. I found that I could be easily approved for a car loan. I was pleasantly surprised to see that the payments on the loan were actually less than the payments were to lease a comparable car. This was another case where taking out a loan was definitely a wise financial investment.