Alternatives To School, Home, And Business Loans

May 2, 2008 – 11:00 am

This is a five-part series designed to educate readers on Avoiding Financial Setbacks.
These will not be displayed daily but as time passes on.

Even with school, property, and businesses, there are alternatives before running to the bank and asking the teller for a loan. - Avoiding Financial Setbacks #4

Last in the fourth edition of “Avoiding Financial Setbacks” I touched on the topics of how, only in my opinion, the only acceptable loans should only come in the formats of student loans, home purchases, and business funding. I stand by that, but I do want for you to know that before you run to the bank, consider other alternatives before asking for a check from Wells Fargo.

SCHOOL
I’m all for education and its benefits, but before you call Sallie Mae there are several alternatives you or your child can take advantage of before applying for Financial Aid.

Grants and Scholarships - Do a bit of Google searching, there’s all types of grants, scholarships, and bonds for all types of fields and people. Best of all, unlike a loan, this is truly FREE MONEY.
Pay Out Of Pocket - You can even consider paying out-of-pocket and invest in your future. Think about it, if you take out a loan, you’ll have to repay it back out-of-your pocket anyway, including extra dollars worth of interest. I’ve learned that when students pay out-of-pocket they are more determined to work and study harder, just because of the fact that their actual money is at state. Plus it’s cheaper than taking out a student loan. Consider inflation, the fall of our currency, and you don’t have to worry about interest rates.
Contact Your Job - If you’re employed, call your Human Resources department and see if they have a tuition reimbursement plan. Most cases, you will still have to pay out of pocket, but as long as you pass the class or achieve the minimum grade according to their terms, you’ll receive that money back. It’s what I’m doing now.
Start At A Community College - There’s nothing wrong with attending a community college. It’s cheap, credits are transferable, and it’s an excellent way to knock out your basic classes in your degree plan before attacking your major at an alumni university. Also, a community college is a great place to learn new things, such as public speaking, writing, music, or any other courses.
Free Online College Courses - Sometimes, you don’t have to go to school to learn a new technique that are often taught at universities. Last month, I posted an article on Free Online College Courses and how beneficial it can be to you. The credits aren’t transferable, but you can instill the knowledge taught throughout the programs. If you want more information, just re-read my article.

Before you call Sallie Mae, search and see if there’s something out there that can help you pay for your own tuition or even part of it. You’ll thank me tomorrow. But if you MUST take a loan, then by all means go for it. It’s an investment in your future and as long as you apply the knowledge you learn in universities or any other scholastic function to the real world, you’ll definitely be pleased with the long-term rewards.

HOUSING
Yes it is difficult to avoid taking out a loan for a $200,000 piece of land, but there are still options to help lower interest rates and the loan overall. Now if you are able to save for the full 100% of a home purchase, then by all means take advantage and be the full-fledge owner of a new property. But to save on interest rates and other charges, take a look at the advice below.

20% Down Payment - First rule-of-thumb, put down 20% or more as your first down payment. This lets you avoid the payment of private mortgage insurance, takes off a hefty lump sum of the loan, and makes lenders view you with a more lenient eye.
Go For The 15-Year - There’s been a lot of debate between if an individual should apply for a 30-year loan as opposed to a 15-year loan. The primary difference, 15 year has a higher monthly mortgage at a cheaper interest rate, while the 30 year mortgage has a higher interest rate with a lower monthly mortgage. My suggestion, as long as you are honest with yourself, choose what you can afford. If you are ABSOLUTELY sure you cannot afford a 15 year monthly mortgage, then go with the 30 year. Otherwise, get that 15 year. Also, take a lesson from the housing crisis, get a fixed rate and not an adjustable one.
Take Advantage Of Your IRA - The law states that first home buyers can take out 10% of their IRA to use as a down payment for their new homes tax-free! This is an excellent benefit if you’re staring at your dream home in the paper but are only a couple of thousand dollars short of your down payment. Your investment goes into another investment.

BUSINESS
HelpMyCashGrow.com is my business. It is my passion to present articles, videos, and downloads to you in on a consistent basis, to teach and educate you to gain a stronger hold on your own financial journey. Just as any business, there are costs and expenses that I must find a way to settle. Here are some alternatives.

Bonds & Funds For Businesses - Banks are ready to give loans to people on their own startup businesses. But don’t take on loans just yet. There are bonds out there that help startup companies, especially “mom & pop” retail shops.
Budget Your Own Money For Capital - A rule of thumb is you should already have a set amount of capital set aside for your own business. Or you can follow my steps and maintain a budget of your own money. As the business grows so can the budget, and before you know it, your business will have gained ground with the hard-earned money of your own. That’s an accomplishment within itself.
Go For What Your KNOW - A loan isn’t necessary all the time for businesses, but let’s say for example you have a product that you KNOW the world needs to see and you’re having a hard time finding investors, then go for the business loan. Just make sure you have a solid business plan to market your product or service before attempting to put any money behind it.

That’s just a brief overview, but there’s a lot more than can be said. The point is, while taking out a loan for a business may be a good idea, consider your alternatives first and avoid liabilities and debt whenever possible.

Here are a couple of websites of free information to get you started on your new business:

CONCLUSION
And there you have it. If, for any reason, the ideas presented does not bring you the necessary funds for assistance, then you can take the risk and get yourself a loan. Notice how each of these titles presented are investments. School is an investment in your future, Home is an investment in property, real estate, and life overall, and Business is an investment in your income and life. All of these are appreciative in some form. Appreciative assets or education are the only loans I would approve of after considering alternatives. Cars, luxuries, leisures, or any other depreciating items should avoid placing you in any type of debt. If you can’t afford it, don’t buy. But if you feel you must have it as a NEED, not a WANT, evaluate it closely, consider alternatives, and please make an intelligent decision before throwing your money away.

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