20. Anything You Cannot Explain How You Will Repay

This is perhaps the most important rule of all.

Before taking any loan, you should know exactly where the repayment money will come from.

Do not borrow first and start thinking about repayment afterward.

Look at your income, existing expenses, other debts and the interest you will pay. Then decide whether the loan makes sense.

If you cannot clearly explain how you will repay the money without putting yourself under serious pressure, **do not take the loan**.

Borrowing can sometimes be useful. But debt should be a tool, not a lifestyle.

Before you sign up for any loan, take a moment and ask yourself: Do I really need this, and will I still be happy with this decision when the bill arrives?

Sometimes, the smartest financial decision is simply to wait.