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7.3 A BASIC RULE OF FINANCE
Borrow
short term for short term needs; borrow long term for long term needs.
For
example, you should never, never, never charge dinner, gas, or groceries and then finance
them long term. In the year 2000 you could be paying for a meal you ate in 1995! Everyday
expenses should be paid out of your monthly budget, not paid with borrowed money. This is
exactly how people start sinking in a sea of credit card debt.
However,
if you buy an appliance, it might make sense to borrow and pay for it over time. That's
because you will be using the appliance for a number of years. A low interest credit card
such as Card Type B (see 2) might be appropriate for such a loan.
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