Personal Loan, just as the term said, is basically a type of loan that you can apply for your personal reasons. You can apply for the loan when you need the money to fix your house, to pay for medical expenses or buy plasma TV or even to go on a vacation etc. Moreover, some people apply for personal Loans simply because they need the money urgently.



For any reason that people can come up with, it's better to answer these three questions first;

1. How much is your income each month

It's better to have an understanding about your income base and your resources, as they can make you see on how much you can afford to apply for a personal loan, how much repayment, plus how much interest that you can afford to pay. One easy way to start assesses your income base and your resources is to write down all your monthly income. Your monthly income should include salary, for both of your salary and your spouse's salary, any government's welfare, etc.

2. How much is your expenses each month?

After you write down all of income, now you can start to write down all of the expenses that you have in a month.

In your monthly expenses you could include your mortgage installment, credit card payment, car payments, health insurances, child support, school fees, living cost and bills, etc.

Now that you have all of your monthly incomes and all of your monthly expenses written down, you can start to sum up your income and your expenses, then deduct your total income with your total expenses. The figure resulted of this calculation is your disposable income. Your disposable income can tell you how much you can afford to make monthly repayments which include principal plus.

3. How can you anticipate uncertain future events?

Now you know that with your monthly disposable income level, you can afford to apply for Personal loan. But what happens if things are changing in the future? What happens if all of a sudden you loose your job, what's happens if there's a significant increase in bills and interest rate? In short, what happens if thing don't go your way. How can we anticipate that?

Well, the best way to anticipate these kinds of things is to try to simulate what's going to happen. For example let just say that because of the economic down turn these day, you loose your jobs. What should you do now?

You can try to do these in a simple way:

1. Look back to your list of expenses again and see which one of the expenses that you can reduce, or maybe to make it even better, you should make budgets for all of your monthly expenses.

2. Re-do the calculation again, this time without your salary, since you loose your job right, re-do the calculation until you can come up to the figures that can make you, at least, pay the minimum repayment each month.

Simple don't you think?? Now that you know how simple and easy it is, you can start to simulate every possible situation that can happen to you in these hard times of economic downturn.

The basic idea of these three simple questions is to learn to understand more about our financial situation and how we can to equip ourselves the better way when the hard times comes. After all better be safe than sorry.