People get into financial difficulties for several reasons. They could be through unwise use of money, such as gambling or poor investments and purchases. Others struggle through things beyond their control like losing a job or needing to pay unexpected medical fees. The harsh reality is that once people sink into debt, things can spiral and become entrenched. Having gained a poor credit score and credit history, there are many challenges to overcome before one can break free.
About 20.2 million people borrow in the US. Taking out a personal loan can seem like the perfect solution for many, particularly if it involves fulfilling a personal dream or gaining quick access to some much-needed funds. Having said that, there are many aspects to consider first.
This article gives you seven key things to think about before proceeding.
WILL THE LOAN BE WORTH IT?
If someone needs to borrow so they can start a business, it could be seen as a long term investment. However, it is highly important to be sure the company will succeed and make mone. Loans have fixed payment terms, so it's essential to know if the business income will be generated soon enough. If the loan is for a car so someone can work, this is a valid need. Cars become personal assets and some people use them as a taxi in their free time to raise extra money if needed.
NOT ALL LOANS ARE ESSENTIAL
Many loans are taken out for things like home improvements. Whilst adding an extra bedroom for a child seems sensible, many improvements are merely cosmetic. In the 21st century, people want things quickly. In days gone by, many people didn't buy things until they could afford them. These days, people simply look at their credit cards. Some personal loans are taken out so a person can fulfill their dream. It may be wise to simply postpone that action.
DO THE CALCULATIONS FIRST
One cannot stress enough the need to do the maths before taking out a personal loan. If a person's home is used as collateral, it will mean there will be a lower interest rate as the company is taking less risk in lending. On the downside, people do lose their homes if they cannot pay their loans.
One has to know the amount loaned, the interest rate, the repayment amounts, and the loan term. Also, some companies charge a loan processing fee (often 1% of the loan value). They may also add failed payment fees and fees if the debt is repaid early. Would-be borrowers need to look at their incomings and outgoings to see whether the loan is viable.
If a couple owns two cars but only need one, it may be wise to sell one if the proceeds will provide the much-needed funds. A three bedroomed house may be ideal when there are children at home, but downsizing, once they have left, is a great option. Fewer rooms are now needed, and money can be released without having to borrow.
Any valuable goods we possess are counted as assets, so we should consider whether they are essential, or if they can be sold to solve our financial problems.
IT MAY BE POSSIBLE TO REMORTGAGE
Even when someone has bad credit, there may still be hope for this avenue to be successful. Whilst many lenders will refuse people with a bad credit history, there are more possibilities than one would think - even if someone has missed payments, defaulted, or had CCJs. The experts here say even some people suffering bankruptcy, payday loans, or mortgage arrears have been able to remortgage. Remortgaging is a great way to consolidate debt, release equity, or raise money for a purchase.
THERE MAY BE OTHER LENDERS
People with a good credit rating should go to their bank first when they need to raise some money. They are likely to get a better interest rate on their borrowing than going to a personal loan company. Borrowing from family or friends may be a good line to pursue. Even if the money has to be paid back, it's unlikely to have interest added to it in the same way loan companies will.
ALLOW FOR THE UNEXPECTED
When calculating one's monthly budget, it's easy to miss things, such as annual subscriptions, bills or taxes. There are also other unexpected things to allow for, like job redundancies, surprise medical fees or urgent car or home repairs. It is always wise to have an emergency fund, and with sole earners, it's even more so. The liquid fund should ideally cover three to six months' salary. The sum should be ring-fenced, and only used when it's absolutely essential.
It's important to look at a calculator before proceeding with a loan and to check out alternatives like remortgaging, postponing borrowing, or releasing other funds. The bottom line is, before taking out a loan, ask yourself if it is worth it, and if you can afford to pay it within the time allowed. Then and only then should someone take things to the next level. Loans ideally exist to serve us, not be our masters.
5 min read
Except for 16, I have celebrated all of my milestone birthdays in New York City.
I turned 16 in Arnold, Missouri. Arnold is a small town (though not small anymore) 20 miles south of St. Louis. St. Louis is known for the Gateway Arch, a beautiful arch of shiny stainless steel, built by the National Parks Service in 1935 to commemorate Thomas Jefferson's vision of a transcontinental U.S. St. Louis is also known for its custard, a frozen dessert that is so thick, they hand it to you upside down with a spoon inside. Something else about St. Louis you should know is that there is a courthouse just steps from the base of the Gateway Arch where one of the most important cases in history was tried: Dred Scott v. Sanford.
I'm turning 50 during what I define as a miraculous time to be alive.
Mr. Scott was born into enslavement around 1799 and, in 1830, was sold to a military surgeon who traveled back and forth between his military posts in Illinois and Wisconsin, where slavery was prohibited under the Missouri Compromise of 1820. In 1842 the doctor and Mr. Scott both married, and they, all four, returned to St. Louis. Still enslaved, Dred Scott filed a lawsuit against the doctor's wife for his and his wife Harriet's freedom. We don't know exactly why he chose this moment in time to file a lawsuit, however, he did. At the time of filing his, now, famous lawsuit, he was 50 years old. Ultimately, The Scott family did not gain their freedom, but their profound courage in filling this case helped ignite the Civil War and what we would come to know (or think we know) as freedom from enslavement for all human beings. Powerful then and even more powerful now.
My next milestone was turning 21, and I did it in the Big Apple. Having only moved to "the city that never sleeps" a few months prior, I knew nobody except my new friends, the bus-boys from the restaurant I was working at, Patzo's on the Upper West Side. And, yes, pazzo is actually the correct spelling of the Italian word, which translates to "crazy." Trust me we all had several laughs about the misspelling and the definition going hand in hand. I worked a full shift, closing out at around 11 PM, when, my kitchen team came out from the line with a cake singing, "Cumpleaños Feliz." It was fantastic. And the kindness of these almost-strangers was a powerful reminder of connection then as it still is today almost 29 years later.
I design the life I desire and the Universe creates it for me every day. I show up, keep the story moving, and work hard because I am relentlessly devoted to making the world a better place and this is how I choose to leave my legacy.
When I turned 30, I had just finished a European tour with Lucinda Childs dance company. The company had been on tour for months together and were inseparable. We traveled through Paris, Vienna, Lisbon, and Rome. We ate together, we rode on a bus together, we had drinks after shows together, and we even took turns giving company class to get warmed up before a show. It was deeply meaningful and dreamy. We ended the tour back in New York City at BAM, The Brooklyn Academy of Music. It was an incredible way to end the tour, by being on our home court, not to mention I was having an important birthday at the culmination of this already incredible experience.
So, when I invited everyone to join me at Chelsea Pier's Sky Rink to ice skate in late August, I was schooled really quickly that "tour" does not mean you are friends in real life, it means you are tour friends. When the tour ends, so does the relationship. I skated a few laps and then went home. This was a beautiful lesson learned about who your real friends are; it was powerful then as it is today.
Turning 40 was a completely different experience. I was in a serious relationship with my now-husband, Joe. I had just come off of a successful one-woman dance show that I produced, choreographed, and danced in, I had just choreographed a feature film, John Turturro's Romance and Cigarettes, with A-list actors, including Kate Winslet and James Gandolfini, who became a dear friend and had even been on the red carpet with Susan Sarandon at the Venice Film Festival for the movie a year earlier.
And I encourage all women to identify their power and choose to be fully in your power at any age.
This was a very special birthday, and I had, in those 10 years between 30 and 40, come to cultivate very real friendships with some wonderful colleagues. We all celebrated at a local Italian restaurant, Etcetera Etcetera (who is delivering for those of you in NYC — we order weekly to support them during COVID), a staple in the theater district. Joe and I were (and are) regulars and, of course, wanted to celebrate my 40th with our restaurant family and friends. We were upstairs in the private room, and it was really lovely. Many of those in attendance are no longer with us, including Joe's Dad, Bob Ricci, and my dear friend Jim Gandolfini having transitioned to the other side. Currently, that restaurant is holding on by a thread of loving neighbors and regulars like us. Life is precious. Powerful then and today even more so.
I write this article because I'm turning 50, still in New York City. However, I'm turning 50 during what I define as a miraculous time to be alive. And I could not be more filled with hope, love, possibility, and power. This year has included an impeachment hearing, a global pandemic, and global protests that are finally giving a larger platform to the Black Lives Matter movement. Being able to fully embody who I am as a woman, a 50-year-old woman who is living fully in purpose, takes the cake, the rink, and the party.
I'm making movies about conversations around race. I've been happily married for 11 years to the love of my life, Joe Ricci. I'm amplifying and elevating the voices of those who have not previously had a platform for speaking out. I choose who to spend time with and how long! I design the life I desire and the Universe creates it for me every day. I show up, keep the story moving, and work hard because I am relentlessly devoted to making the world a better place and this is how I choose to leave my legacy. Being 50 is one of the most amazing things I ever thought I could experience. And I encourage all women to identify their power and choose to be fully in your power at any age. I'm 50 and powerful. Dred Scott was 50 and powerful. This powerful lesson is for today and tomorrow. We have the power. No matter what age you are, I invite you to use your powerful voice to join me in making the world a better place.