When the average consumer starts asking for help, whether it’s a job or financing, they typically think about the money available through their employer. They may see some flexibility in paying rent or other bills, but constraints limit how much time they have available to spend on other things, like making ends meet. If we consider these realities in an economic scenario where people must take advantage of every dollar they can get, this is where we find ourselves today.
To survive economically, the current population has become accustomed to living paychecks, with little room in their budget for extra spending on stuff that isn’t necessary (or even essential). Instead of buying clothes, cars, furniture, and electronics, they now depend primarily on loans.
Let us quickly look at some statistics and real-world data before coming up with your conclusion: According to the Bureau of Labor Statistics (BLS), if a person has no income or unemployment benefits but still needs to buy food, then they owe an estimated $1 trillion in monthly payroll taxes each year. Add another $1 trillion per month for health care, housing, education, and transportation, plus another $900 billion in state and local government assistance dollars! A single-family spends approximately $6,800 per year in monthly payroll taxes. That amount could cover many necessities, from healthcare to groceries and clothing. Yet even though all of this money is spent, the typical American worker only manages to pay the minimum wage of $7.25 per hour. During that time, the typical family has difficulty meeting the basics of life, significantly when their children grow up into adulthood without these services. It was never before when someone would need to borrow money to give themselves a new life to live so they could make an independent choice and stay with their kids and friends without relying on welfare as a crutch. Unfortunately, the economy doesn’t support anyone who lives the way they do now. The top 1% of earners earn 95% of our total income. Even though we are lucky enough to enjoy the middle class, we often work multiple jobs due to financial difficulties and sometimes even unemployment. Thousands of Americans don’t have the option of being employed because they do not have the funds to go to college.
As a result of this situation, most parents turn to home improvement loans and personal credit cards to provide for their families. This usually means working more hours than they previously did or taking on additional responsibilities. But what happens when these loans aren’t just used to provide basic needs but also to pay down debt? And while one of the most significant advantages of using a loan to finance something is to allow someone to live for a while without putting off the rest of their life, does it help them?
Most people will answer “No way,” but I beg to differ entirely. Because the truth to the matter is that we can create our circumstances, and many of these situations arise because we haven’t taken the steps necessary to start saving and growing our businesses, and our incomes, instead of taking them out by loans. These loans are an excellent opportunity to invest in assets that will increase our earning potential and reduce our reliance on handouts that will prevent us from getting ahead. Not all options come with a reasonable interest rate, but it is possible to start right away. So why are there so many people who take on cash? Why are so many people struggling financially? What are the best options? How do we get started?
We spoke to Brian Griesemer of Trulia, one of the nation’s largest online staffing companies, and asked him these same questions. He shared important information on different types of loans and how to get the most bang for your buck when getting started early.
What Are The Different Types Of Loans?
There are countless types of loans available to borrow from across industries, including small business loans, student loans, mortgages, lines of credit, personal loans, home equity line of credit (HELOC) loans, car rental loans, equipment leases, credit card financing, and more. Some industries use these products in varying degrees of the scale, while others have relatively fewer users. Let’s take a peek at a few standard terms as well.
Credit Card Loan
The term “credit card” refers to any revolving account that allows consumers to receive payment for products or services generally accepted worldwide. Since these accounts can vary based on their usage level or other factors, they are known as credit cards. Most credit card companies offer debit cards, like Apple Pay or Google Pay, and prepaid cards, which can only cost a certain amount, often between $20 and $30. Many credit cards usually require applicants to present proof of identity, a driver’s license, or a copy of a utility bill to verify they are eligible for approval. If this seems too complicated, you can compare rates online, and find out all the details required for applying for the perfect loan. Lenders will also look at your debt obligations and figure out what you want and need. Whether the process is overwhelming or straightforward, these credit cards may not benefit everyone.
Debit Card
Also known as a prepaid card, a debit card can be used everywhere, as long as you have access to a bank account with cash. According to the merchant, your debit card can cost anywhere between $5 and $10. Often, debit cards are linked to a specific company or organization or may be purchased outright through a debit card network. On the bright side, the downside to being a debit cardholder is that no monthly fees are charged, although some brands may add charges for transaction fees of 10 cents or even 2 cents per transaction. Other charges may include hidden fees such as an annual fee to activate premium services or a flat yearly fee for renewal and deposit statements. It is also worth mentioning that you can also get these cards to open doors to places and events. For example, Chase Sapphire Preferred Credit Cardholders pay 0.05% compared to 0.025% for Diamond Platinum Mastercard holders.
In contrast, Visa Signature Preferred Credit Cardholders pay 1.375% per year compared to 3% per year for First Choice Titanium Platinum Advantage Preferred Rewards MasterCard holders. So if you need to secure open doors, a standard debit card is probably the best option. Plus, the availability of debit cards makes it easier for individuals or couples to split the cost of spending with just one or two members.
Student Loan
Student Loan Debt can be tough to talk about since the debt associated may be very large and can hurt anyone who chooses to borrow. However, there is nothing wrong with seeking help to save your future or improve your earnings to afford it, or to borrow just for fun. Student loans will typically be a little bit higher than a mortgage, and many student loans that should have been paid in college are still unpaid. As a result, there are plenty of reasons to get rid of student debt as quickly as possible.
Education Loan Accounts
Education loans are a popular form of lending that can give you a leg up in the workplace, or finance your childhood dream of attending university. Unlike many loans, these can be repaid as quickly as six months after graduation, in about 13 years of regular school with an overall repayment time of over 20 years. Education loans only apply to students between 18 and 21 years old, but it is possible to get approved for more significant amounts later on depending on your grades, test scores, and experience. While they are a bit different from traditional loans, their idea is similar to an education loan: You go to college and get a degree in your field, and then you can get a higher pay later on. A considerable part of the student loan experience is learning about yourself, especially with colleges offering many internships to see firsthand how your skills go.
Auto Loans
Another option for obtaining a better return on investment, is auto loans are a convenient way to acquire an asset for your vehicle. It takes to get an application, fill out the paperwork, and pay your bill. Having an automobile might seem like a no-brainer, but let me explain why these loans are ideal for those wanting a safe and flexible way to purchase one, and how much of a hassle and expense it might be for someone who already owns one. Cars are the ultimate symbol of confidence and independence. Because owning one allows you to decide to go full-time to work, it gives you freedom and autonomy to grow your career regardless of whether you are currently a full-time employee. Also, let’s face it — owning an automatic car might be a nice bit of luxury that someone can afford. Imagine how easy it is to find an affordable car in your area, and how much flexibility it provides if you don’t have to worry about running costs, insurance, and repairs… all at once instead of taking a few minutes to do it yourself.
Home Equity Line of Credit Loans
In addition to granting access to a vehicle, home equity line of credit loans are another way to gain control of an asset that you may not be able to obtain otherwise. With home equity loans, you can use your home to pay for your next giant leap of faith, and use it as collateral for anything you want — a second car, a boat, or RV.
This isn’t to say that homeownership isn’t a great thing for those who believe in saving money. Home equity loans may be a route to starting a business or investing in your future
