Before you take out any loan – especially a mortgage – you should have a cash reserve established to save your ass in the event something bad happens. Most lenders require a 2 to 6 month cash reserve to even qualify!
No one knows when there may be an accident, a loss of a job – especially in today’s volatile economy – unexpected health issues, or any other unfortunate event. You need to establish a cushion so that you can offset any decline in income. I am going to say that again. You need to establish a cushion so that you can offset any decline in income!!!
If you are taking out a new loan to cover your expenses until the next pay check, like a pay day loan, you are in what some would say to be serious trouble. Before you incur any debt, it is best to set aside a sufficient cushion that can be readily accessed in case trouble arises.
If you start missing payments on your mortgage, car loan, or credit cards, you can watch your credit score tank faster than the Titanic (which I just watched last night).
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Wow what an excellent piece of information. This article is great and I agree with you whole heartedly. As you said we have to have a cash reserve in order to save credit. Payday loans are wonderful options that gets us out of unexpected emergencies. I look forward to read more of your writings.
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