Borrowing Money Essay

619 words - 2 pages

Essay March 19, 2014When one borrows money from another, trouble can often find its way to either the lender or the borrower. It can never be in one's best interest to borrow money from someone because it might end up in a catastrophe. Money has been something the human race has been fascinated by for years, and wars have been fought for this pointless reason. People borrow from others because money can either aid a person in their existence or leave them famished in the street. However, once the money is borrowed, every penny must be returned to fulfill the debt.To begin with, the first reason one should not borrow money from others is because they will end up paying more than what they should have. So, they will end up losing more money than only borrowing. The reason why this is so is because most loans come with interest which means an additional amount is charged to the borrowed money. One can borrow from anywhere or anything, but in return one has to pay the lender back with even more cash. In order to borrow money one must have even more money since it is the price one pays to loan money.Next, another reason not to borrow money from others is that one is not able to pay back the loan then a penalty is enforced where income taxes are raised 10% in addition to the debt if one is under the age of 65.9. If one quits from their current job, the money is expected to be fully paid immediately. Also, if a better opportunity comes along for a better job, one would have to let that chance pass. In addition, one loses their financial cushion when they borrow money because if a hardship comes along in the...

Find Another Essay On Borrowing Money

Capital Structure of a Firm Essay

875 words - 4 pages the firm due to share premium is 37m x $1 = $37 m. This is equivalent to $ 0.27 per share. This can be shown as, 12.50 x 100 + 500 = 12.77 100 + (500 /13.50) The par value is $ 12.50, 12.77 – 12.50 = 0.27, which is the premium per share. The borrowing cost is $20 m and the firm will compare the $20m borrowing cost with the $37 m benefit accruing from share issue at a premium. The best choice is to issue shares to maximize on the premium

Government Spending, Deficits, and Keynesian Economics

1277 words - 5 pages A growing government is opposite to America’s economic interests because the various methods of financing a government - taxes, borrowing, and printing money have harmful effects upon the economy. There are many reasons why there is a high deficit in the United States such as extensive spending. This is true because government spending is often economically destructive, regardless of how it is financed. There are many causes of the steady growth

Inflation & Unemployment Effects

2190 words - 9 pages government in 2004 they have raised the interest rates to reduce borrowing (Begg et al, 2000).Interest RatesThe interest rates are set by the equilibrium in the money market, which is dependant on the demand and supply of the money in the economy. The demand for money is derived from the borrowing rats and consumer depending. The supply of money is determined by the monetary policy of the government. As seen in the diagram below:Through an increase in the

Great Depression

632 words - 3 pages would be a way to make millions of dollars. Many people bought stocks on margin, borrowing millions of dollars from the bank. If the stock fell, then the investor would lose all the money and go into debt. He/she would not be able to pay back the bank. Before 1929, the market was very prosperous and people were investing and borrowing everything they had. But by late 1929, stocks began to drop and the people who bought stocks on margin lost

The Devil and Tom Walker: Causes of Economic Depression

596 words - 3 pages . Liquidity and the lack of funds, imposed strict rules for borrowing money and increased the difficulty to repay loans and increased interest led many people and businesses to worsen the economy. According to Michael Madianos, Emeritus Professor of Psychiatry at University of Athens, reported that businesses, “facing serious [of] economic hardship[s] were mostly at risk” of changed of destination from productive purpose. As a result, many people suffer

Funding A Business Venture

886 words - 4 pages available. In the case that my attempt to license the technology is unsuccessful to fund my start-up, I have selected borrowing money as a back-up funding source to begin my business. Applying for loans can be chaotic, as there are many different types of loans available, all with different provisions. This can be a very stressful situation, in that one may feel unable to make the first few payments on time being that the business is just

Time Value of Money (TMV) Paper

881 words - 4 pages IntroductionIn financial management, one of the most important concepts is the Time Value of Money (TVM). Many of the assets businesses and individuals own are financed with money borrowed from others, so the understanding TVM is crucial to making good buying and borrowing decisions. This paper will examine the effect of annuities and other investments on TVM problems and investment outcomes.TVM and Opportunity CostThe essence of the TVM concept

Time Value of Money

880 words - 4 pages In financial management, one of the most important concepts is the Time Value of Money (TVM). Many of the assets businesses and individuals own are financed with money borrowed from others, so the understanding TVM is crucial to making good buying and borrowing decisions. This paper will examine the effect of annuities and other investments on TVM problems and investment outcomes.TVM and Opportunity CostThe essence of the TVM concept is that

Discuss the primary purpose of financial markets in respect to financial instruments and institutions.

554 words - 2 pages always be enough money, people are encouraged to save by providing low interest rates that reward the customer. In the same respect, those that borrow money must pay interest to cover the expenses of the bank's intermediation in borrowing and lending as well as the interest that is paid to the surplus unit.The bank's intermediation also allows the spread of risk over many borrowers and many lenders.So far we have seen how financial markets use

Comment on the forecasts for the UK Public Finances as set out in the Red Book - the UK Government's Budget Statement

3145 words - 13 pages how the latest projections of the public finances are consistent with meeting these rules - including:*Five year ahead projections of the current budget surplus and public sector net debt, the key aggregates for assessing performance against the golden rule and the sustainable investment rule, respectively;*Projections of public sector net borrowing, the fiscal aggregate relevant to assessing the impact of fiscal policy on the economy;*Consistent

Solving the Foreclosure Crisis While Protecting the Free Market Economy

1046 words - 4 pages reduce the fees that are charged to close a loan. Individual compensation for the mortgage lending process should be based on salary, not based on how many deals an individual processes. Borrowing money to buy a home is costly enough in itself. The lending company should measure their profitability based solely on the interest revenue from a loan. Furthermore, lenders need to provide ethics training to loan officers, brokers and anyone in

Similar Essays

Borrowing Money Throughout The Us History

1751 words - 7 pages trust funds invest their money by lending it to other parts of the federal government (Guell, 2011) The subsequent part of owning the debt is the interest that comes alongside while borrowing money. Every college kid or adult who took a loan in their lifetime understands interest. It is everywhere even in the government. Meaning that as the total debt increases, the interest expense continues to grow exponentially (Bussing-Burks, 2013). In the

Foreign Borrowing Policy Essay

995 words - 4 pages more attractable. As a result, trade deficits and unemployment soared. To finance trade deficits, Chile government needed to keep borrowing and end up with highest per capita debts in all Latin American countries. $11 million of its $19 billion debts can be ascribed to this consumption policy. Capital flight: Capital flight occurs when money rapidly flow out of a country. And defined by George ( 1988, pp19) as "take money and run". Yet even as

Rsearch And Summarise Financial Regulators In The Australian Ecnonomy As Well As Interest Rates.

702 words - 3 pages uses its domestic market operations to determine the cash rate in the money market as a result of the interaction of demand for and supply of overnight funds. On the days when monetary policy is being changed, market operations are aimed at moving the cash rate to the new target level. By accomplishing this, other interest rates in the economy are influenced. A lowering of the cash rate will lead to a cheaper cost of borrowing funds in the cash

Current Business Research Project Paper

581 words - 2 pages Imagine having to borrow money and risk serious debt just to stay healthy. The article "Borrowing to Stay Healthy" provided some scary statistics on what low to middle income people are resulting in doing to pay off their medical bills. It also provides real stories from people who have had to charge their medical debt to credit cards to illustrate the impact. This paper outlines the business research performed, the purpose for sharing it to the