Earlier today, I asked visitors to let us know what kind of loan person they are. The five categories I included are listed below:

Are you the type that is …

• a. always borrowing money?
• b. occasionally borrowing money?
• c. seldom borrowing money, except for big ticket items?
• d. you only borrow money to increase your wealth?
• e. you never borrow?

I didn’t offer an explanation of each type, as each type of person varies in their attitudes to loans, money and wealth. So here goes…

“I’m always borrowing money: from the first day of the month to the last, and repayments are frequent, expensive and frustrating.”

Attitude: If you are always borrowing money, then perhaps you are facing cashflow problems. You are using regular loans or even an occasional cash advance to finance your daily life, such as shopping, leisure, bill paying, etc, perhaps through short term financing options.

Challenge: Obviously, you need to start somewhere and control the amount you are spending on loans, by cutting some costs, paying off the most expensive cards/loans, and using more of the leftover cash to finance regular bills.

“I usually borrow money to pay for things like Christmas, vacations, car repairs, luxury items, and so on. It’s convenient to borrow, and I usually repay on time.”

Attitude:If you are occasionally borrowing money, then perhaps you aren’t always being the most careful in your shopping habits. When you see something that is a little more expensive than you can afford right now, you are splurging on a short term loan or store finance to take the item home.

Challenge: You may find that you can refinance your current mortgage (as we did) and save a great deal on your payments every month.

“I only borrow for really big items or services that I can’t budget for from my regular income or savings: typically, new cars, houses, house renovations, weddings, and so on. I repay as quickly as possible to cut the interest payments and I always shop for the best loans.”

Attitude: You tend to shop for loans, like Mortgage Loans or Car Loans, and will probably spend as much time shopping for the loan as well as the item or service itself.

Challenge: Your challenge is that your savings amount isn’t really keeping up the with the changes in your life situation. Perhaps you’re not budgeting properly, or your budgets aren’t based on realistic expectations about your current situation.

“I only borrow money to increase my wealth. So I borrow money to invest in my business, or to invest in my real estate.”

Attitude: Likely you see using other people’s money (OPM) as a tool for you to get ahead personally without risking your own wealth. This act of leveraging your assets will also allow you to make extra returns on any money you do invest in any project.

Challenge: You really need to understand the kind of people who are lending to you, what drives them to lend, what risks they are taking, and how they will react if things do go wrong. And sometimes, they do!

“I simply never borrow money. I never have. I don’t now. I never will.”

Attitude: You are missing out on one of the greatest inventions of mankind: the ability to borrow or lend. Are you afraid that borrowing money will in some way diminish your power or freedom?

Challenge: Borrowing money appropriately isn’t a curse, it’s a privilege and a huge benefit allowing us to own things that previous generations couldn’t even dream about.

So what is your attitude? What kind of person are you? How would you define yourself in relation to borrowing?

Posted courtesy of Rebuild.org.

Ed. notes – This article was trimmed for style reasons from the original posting. It works better like this.