Before making the decision to add more debt, you need to make sure that you:
Allocate sufficient money for your essentials.
Borrow only for items that you need and can afford.
Borrow only if you're spending less each month than you take home.
Start with your monthly take-home pay.
This is the amount you have left after taxes and other deductions have been made.
Subtract the amount you need for necessities and fixed expenses.
This includes savings, your mortgage or rent payment, utilities, food, transportation, child care, medical care, clothing, and recreation. Include payments made on a quarterly, semi-annual, or annual basis, such insurance and taxes.
Subtract monthly payments for existing loans and credit cards.
The balance is the amount you can safely apply to debt repayment
Avoid thinking you can spend all this amount, since emergencies do occur, and you may not wish to use your regular savings account to cover small, unexpected expenses.
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Before making the decision to add more debt, you need to make sure that you:
Avoid thinking you can spend all this amount, since emergencies do occur, and you may not wish to use your regular savings account to cover small, unexpected expenses.