Category Archives: Managing Financial Stress

Knowing Whether or Not to Loan Money to Someone

At one point or another, most people will find themselves in situations where they asked for a loan. The person making this request may be a relative, close friend, or even a co-worker. Loaning money comes with its own risks and stigmas; what if the borrower takes too long to return the money? What if they can’t afford to pay back the loan? Worst of all, what if they simply choose not to?

Most people feel inclined to provide aid to those who are closest to them. However, there are still certain factors which should be taken into account prior to handing out monetary loans. Keep reading if you’re interested in learning more.

Consider the Qualities of the Person

Not every person who asks for a loan should be told yes. Hence why the qualities and characteristics of the prospective borrower should be taken into account before any funds are exchanged. Integrity, personal responsibility, and even current financial standing each play a role in how likely the individual is to, not only, return the borrowed funds, but also do so in a decent amount of time.

Another point to take into account is whether or not the asker has previously borrowed money from other people. If so, has he or she paid it back in a timely manner? Believe it or not, borrowing history tends to be quite indicative of an individual’s forthcoming habits, as they pertain to money.

Look into Creating a Legal Contract

While amounts of borrowed funds can vary, WikiHow advises lenders to draw up legally binding contracts; this especially comes in handy when hefty sums of money are being loaned. This can be done by having the borrower sign the contract and also ensuring that the document is enforceable via the Uniform Commercial Code (UCC).

Instituting a clear payment plan and eventually getting the contract notarized are also critical steps towards legalizing the form. Although going through the process of creating a legal contract may seem like a bit much to some individuals, it can truly come in handy later on down the line. Moreover, if a prospective borrower is unwilling to sign a legally binding contract, they may not be the best person to loan money to.

Trust Your Instincts

At the end of the day, each person is tasked with the decision of whether or not they want to loan money to a friend or relative who asks. Considering their qualities and characters can be incredibly beneficial, as can creating a legal contract; however, at the end of the day, your instincts should always be the determining factor.

No matter how good or trustworthy someone appears to be on paper, if your gut tells you to turn down their request to borrow money, do so. You are under no obligation to hand out loans; furthermore, you must first help yourself before you can truly help others.

A Final Word

Hopefully, the preceding advice will prove helpful to anyone who is undecided about whether or not they should loan money to someone they know.

 

Authored by Gabrielle Seunagal

How to Pay Off Student Loans

Taking out student loans is a fairly common practice. Many young people do this for the sake of investing in their education or otherwise being able to attend college or university. Initially, being able to take out student loans and attend college may seem like a dream come true. However, this dream can quickly turn into a nightmare when young people are not only billed for the money they borrowed, but also the subsequent interest fees which come along with it.

Virtually everyone has heard of the countless horror stories of young people who spend decades or even lifetimes attempting to pay back their student loans. Thankfully, there are some helpful tips for those who wish to pay off their student loans in a reasonable time period and enjoy the upsides of being debt-free and financially well-off.

Look Into Certain Occupations

Student Loan Hero explains that there are various occupations which offer certain mandates in exchange for forgiveness of borrowed funds. Usually, jobs of this nature fall into the category of teaching or providing some other type of public service. However, taking advantage of such an opportunity requires more than simply applying for the job and being accepted. In most cases, these type of occupations also require work terms in addition to various mandates.

Finally, if an individual is ineligible or otherwise barred from receiving student loan forgiveness, they will have likely incurred additional interest fees during the time they spent towards acquiring forgiveness. For this reason, students should always look into whether or not they are eligible for this opportunity prior to pursuing it.

Make Certain Lifestyle Changes…at Least Temporarily

Rarely does anyone enjoy changing their lifestyle for the sake of having to pay back previously borrowed funds. However, the reality is that student loans must be returned, one way or another. Hence, Nerd Wallet advises young people to look for various ways to reduce their expenses and put the extra money towards paying off their student loans.

This doesn’t mean that individuals who owe student loans can never go to the movies or dine out; however, they would do well to perhaps engage in these activities less frequently or find similar ways to decrease what they owe to the government. This is can be done by either decreasing expenses or increasing income. Ideally, if both changes are successfully implemented, young people will be able to pay off their student loans at a much faster rate and save thousands of dollars, if not more.

A Final Word

The amount of young people who owe student loans is increasing each and every day. For this reason, more and more individuals are questioning whether or not college is truly worth it. Nevertheless, those who have already incurred loans will have to pay them off, one way or another. Many young people make the mistakes of either delaying payments or only paying the minimum amounts. This is not conducive to financial or economic success.

Finally, individuals who believe they can cheat the government out of getting returns on borrowed funds should tread very carefully. People who play this game never really win; the government almost always get their money back — on top of the sky-high interest fees.

 

Authored by Gabrielle Seunagal

How to Take Out a Loan

There are many people who will take out loans in their lifetime. There are many banks, online lenders, and additional financial institutions which have no problem issuing these loans. However, the reality which most individuals fail to understand is that loans almost always come with interest rates.

In other words, not only will people have to pay back the loans, but they will also pay for having to borrow money in the first place. For this reason, it is highly critical for individuals to tread carefully in regards to taking out loans. Thankfully, the following advice will certainly provide some much-needed insight.

Be Sure that It’s What You Truly Need

Virtually everyone stumbles upon a time or situation where they need to have money. However, being in need of funds does not necessarily mean that you should run to your nearest financial institution and seek out a loan. Sometimes, there are other available alternatives, such as dipping into savings or even asking a friend or relative if you can borrow money. However, not everyone has the aforementioned alternative; there are some cases where a loan from a financial institution is the most feasible solution for financial issues. Nevertheless, exhausting all options prior to taking out a loan is always best.

Come with the Necessary Materials

Individuals who require loans from financial institutions will have to complete an application and present official identification, as stated by Pocket Sense. After doing so, the hopeful borrower will also be mandated to show proof of their income. Of course, proof of income is required for the sake of the financial institution; before lenders loan money, they almost always ensure that borrowers have the financial means to pay the loan back, preferably within an allotted amount of time.

People who take out loans should also have a plan for payment. Proof of income is great, but on a practical level, this is not enough. Borrowers should map out exactly how much money they will put towards paying off the loan each week/month. This plan should also fit in with their budget, thus allowing the borrowing to cover their living expenses, put funds into savings, etc. If putting together a clear-cut payment plan is not possible, rethinking the prospect of taking out a loan may be a good idea. After all, fees and interest rates don’t care about personal circumstances or financial hardships.

A Final Word

Taking out loans comes with its own risks and setbacks. There are often many stipulations and strings attached which borrowers fail to realize until after the fact. For these reasons, taking out loans should always be done with extreme caution. Being truly sure that it’s necessary and having a very well thought out payment plan will make a considerable difference.

 

Authored by Gabrielle Renee Seunagal

How to Pay Back a Loan

There are many people who wind up taking out loans at one point or another. Perhaps they needed the funds to invest in their education, pay bills, cover a sudden emergency, etc. However, regardless of the reason, the ultimate reality is that borrowed funds must be paid back.

Unfortunately, there are countless individuals who struggle with paying back loans which they took out. This ultimately doesn’t bode well, seeing as interest rates can be astronomical and quickly pile up with the passing of time. Therefore, people who are struggling with paying their back loans should adhere to the following steps.

Make Payments

Although this step sounds obscenely obvious, it’s one that many individuals fail to truly follow through on. So often, people get caught up in other financial demands, thus putting off loan payments. In even more unfortunate circumstances, some borrowers are unable to pay off their loans and simultaneously cover their everyday living expenses. Both scenarios almost always engender higher interest fees, and in some cases, total financial ruin.

According to OneMain Financial, some of the best ways to pay back loans are on a biweekly basis and via extra income. Extra income could be bonus/pay raises at work or even money which is gifted as a birthday or holiday present. No matter what, finding a way to put money towards borrowed funds is absolutely critical. Depending on the terms and conditions of the loan, certain lenders may be well within their rights to sue if their money isn’t returned to them within a certain time period.

Increase Revenue Streams

Individuals who find themselves struggling to pay the bills and also pay back their loans should look for ways to increase their income. Thankfully, this is relatively easy in 2018; the freelance market and gig economy are absolutely full of opportunities for people who know where to look. Sites like Fiverr and Upwork are free, thus allowing people to create profiles and market skills which potential clients are in need of. Some of the most popular and well-sold skills on the aforementioned platforms include writing, video editing, website design, etc.

Additional opportunities in the gig economy include driving for rideshare services such as Lyft and/or Uber or even renting out rooms on Airbnb. Each of the preceding options should be strongly pursued, especially if someone finds themselves struggling to comfortably pay back money they have borrowed from a financial institution.

A Final Word

While the process of paying back a loan may feel inconvenient at the same, the long-term benefits truly do pay off. Debt is like a proverbial cloud looming over one’s head. Getting rid of that cloud truly makes a difference and allows the borrower to not only avoid interest fees, but also put their money in savings, towards bills, or even towards investments.

 

Authored by Gabrielle Renee Seunagal

How to Financially Prepare for a Recession

Nobody likes to think about recessions and all the havoc which they can bring upon a society and to the economy. Nevertheless, many people have lived through and experienced the plights of recessions. Although they take a toll on virtually everyone, members of society who are most vulnerable and least prepared tend to suffer on considerably higher levels. This is what makes financial preparation so absolutely paramount.

Failure to plan is ultimately a plan for failure. However, the following steps will allow people to not only prepare for a recession, but also protect the businesses and funds which they have garnered over the years.

Consistently Save Money

As stated by Money Talks News, constantly putting aside money always make a big difference, but it especially comes in handy during a recession. Financial advisors currently recommend for people to put aside at least six months to one year’s worth of living expenses. This is something which a surprisingly high percentage of people fail to do. Many of them believe that a crisis will not befall them, but a safety net always comes in handy. Consistently saving a certain percentage of funds from each paycheck makes a difference.

Saving money prior to a recession can truly determine the difference between survival and homelessness.

Look Into the Gig Economy

There are many opportunities which exist within the gig economy. Driving for Lyft/Uber, renting out rooms on Airbnb, content writing, graphic design work, and more are all opportunities which people can and should take advantage of. Not only does this allow for individuals to create an additional revenue stream, but funds earned in the gig economy can be put into savings, bills, etc.

Every person will find that money and savings are their greatest economical allies, especially in the face of a pending recession.

Pay off Any Incurred Debts

Another important thing to do in preparation for a recession is paying off debts. No matter the state of the economy, credit card companies will continue to charge interest for unpaid balances. Over time, this can truly chip away at your income; besides, any money which goes towards interest is lost income which could have otherwise gone towards savings or bills. It’s also worth noting that paying interest does not decrease one’s debt, but merely lessens the fees for not paying one’s debt on time.

Money is an incredibly valuable resource; it becomes infinitely more valuable during times when the economy is experiencing a recession. For this reason, everyone should be actively working to become debt-free.

A Final Word

Ideally, people should be saving money, creating additional revenue streams, and paying off debts regardless of whether or not a recession lies in the near future. Being in the strongest financial state is always the best way to set oneself up for success. While economic recessions might prompt stronger precautions, you can never go wrong when you are in good financial health.

 

Authored by Gabrielle Seunagal