Lender or borrower?

By David Malherbe   –   Published in Drakenstein Gazette – Friday 7 February 2014

In last week’s article I called on readers to be cautious when taking on new debt because of the possibility that a raise in interest rates may be at hand; and before the newspaper hit the streets the interest rate went up by a half a percent.

But in the same breath we are warned that this may only be the beginning of more rate hikes over the next year and a half.  The hike in interest rates will affect people in different ways.  Some people with investments (often elderly and retired people), will welcome the higher interest rates because it will increase their income.

Should you be in the fortunate position of having no debt, it will have no effect on you whatsoever.  But if you have outstanding debt, you will definitely feel the pinch when monthly payments on current debt start to increase.

How you experience the above mentioned situation will be determined by your choices and actions of the past.  Your decisions and actions of the past brought about your current situation.  Unfortunately you cannot change the past, but you can have an influence on your future.  Now that you know that interest rates tend upwards, how will you go about the next year or so to minimize the negative effect of higher interest rates?

As I’m writing this article I sit on the porch of a guesthouse in Jeffrey’s Bay.  As I look down the road towards the sea there are two street corners in my view on which I count no less than sixteen advertising boards of estate agents advertising properties for sale.  This means there are many people who previously made commitments that most probably now put them under pressure.

What will your situation be two years from now?  If you are indebted, make it your aim to become debt free.  If you are debt free, try to save some money so that the higher interest rate can work to your advantage.  Prov 22:7 says “… the borrower is the servant (or slave) to the lender.   What you do now will determine your position two years from now.

David Malherbe and Dewald Scholtz will discuss this topic in more detail Monday evening from 19:00 till 20:00 on Radio KC 107.7FM in the program “You the Entrepreneur”

(David Malherbe is a business- and career consultant and lives in Wellington.  He can be contacted via his web page www.jedidiah.org.za or T/F 021-873 0262 or on Facebook at “Jy die Entrepreneur.”)

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