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5 things to do before getting a personal loan

[Jul 1, 2011.]


A personal loan can help you get through a financial emergency. But borrowing money shouldn't be the first option you turn to when you need cash. Consider some other ways to raise cash before applying for a loan.

  1. Drop unnecessary expenses from your budget. Cable, cell phones, movie rentals, dining out are all items that are luxuries, not necessities. Think about some of the things you spend money on that you can live without. This may involve sacrificing some of the things you enjoy, but that doesn't mean the cutbacks have to last forever.

  2. Dip into emergency savings or investments. If you have money saved up for a rainy day, now may be the time to use some of it. Once you get through your financial crisis you can begin working on building up the savings account again. If you have investments in non-retirement accounts, take a look at how much interest is being earned. Depending upon the situation you may be earning less that the amount of interest you'd pay on a loan.

  3. Borrow from a friend. Yes, borrowing money from a family member of friend can be risky, but if you have someone you really trust willing to help, it is worth considering. Just make sure you draw up a formal contract that outlines all the terms and conditions for borrowing the money.

  4. Get a second job. It's a tough job market but there are jobs available that you might be able to moonlight at. Don't look at a second job as a long-term situation so that you'll be more likely to stick with it to meet your financial goals. Watch for help wanted signs at local businesses when you're out and about.

  5. Clean up the clutter and sell items you no longer need. There's a good chance that someone may want some of your old junk. Do a bit of research to find out how much you can get for your stuff before holding a yard sale or placing an ad online or in the newspaper.

There are times when it makes sense to borrow a loan. But there are many situations where being a little creative can get you the cash you need and allow you to avoid paying a lot of interest for getting a loan.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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