Understanding How Personal Loans Work

Everyone needs a little extra money from time to time. There are a variety of ways to borrow needed money, including a home equity loan or a credit card advance, but you might want to consider a personal loan when you find yourself in a position of need. Personal loans are short-term loans and can be used for any purpose, such as consolidation of other debts, purchasing new appliances, or buying a new car. The average personal loan ranges from a few hundred dollars to several thousand dollars. This type of loan is paid in equal installments over a determined number of months or years.

Before You Apply
Before applying for a personal loan, take the time to consider the responsibility that accompanies your choice to borrow money. Financial responsibility dictates you do not borrow more than you can easily pay back. It’s very easy to be tempted to buy something you really don’t need, simply because the cash is available to you. When you obtain a personal loan, you are obligating your future income to the lender. Each time you are paid you will need to set aside a portion of your monthly payment to be sure the amount owed is available to be paid on the loan’s due date, and this requires self-discipline. When an emergency arises, or you need a new refrigerator right away, a personal loan is the perfect solution. As convenient as it is to have ability to borrow money and pay it back over time, remember it is a privilege. Be sure your payments are made on time, as the lender will be adding all your loan repayment information to your credit report.


When You Apply
Although the application process for a personal loan is less complicated than for other types of loans, there is a certain amount of paperwork that must be completed. Be prepared when you go to apply. You will need the following items to complete your loan application:

You will need a photo identification card. A driver’s license, state identification card, and passport are generally accepted documents for establishing identity. Your social security card will also be required.
You will need to provide proof of residence. This can be done with a tenant-landlord lease agreement or the mortgage payment statement for your home. If you are a student living on campus, you may be required to provide proof of your campus residence as well as your normal home residence.
You will need to provide proof of employment. Be prepared to supply all your current employment information, as well as past jobs for at least three years. The information should include the name, address, and phone number of the company that employs you. Bring your last few pay stubs or electronic transfer deposit statement for the last few weeks.
Be prepared to list all debts you currently owe, such as your car payment or furniture payments.
As long as you have good credit and a steady job, you will probably have no difficulty getting a personal loan.

Marriage And Money – How To Divide?

Before you start reading, realize that this is one man’s opinion on how you should divvy up your money in a marriage. But it does come from someone who has not only been happily married for 20 years, but also has a smooth-sailing financial life.

In other words, my wife and I are very happy with our financial picture, have close to zero debt, and don’t have any real money issues. If you are going to listen to someone financially, we’re a couple who has our ducks in a row.

(**note – stating the preceding is important. I have had debates with people who have strong opinions on this topic, only to find out that they have a terrible financial picture, lousy credit, and couldn’t even buy a set of new tires right now without a credit card. In other words, they may have a certain way of doing this, and even feel strongly about it, but it’s clearly not really working for them.)


So here’s my advice on the subject – there really is no divvying up the money. It’s ALL “your” money (and by “your”, I mean as both of you as a couple).

In other words, there is no mine and yours. No “I pay these bills, you pay those bills.” Here’s how my wife and I do it:

Two main accounts. One for saving, and for bills. The bulk of both of our paychecks go into these accounts, and ALL bills get paid from the “bills” account (including funding our IRA’s).
We each have a slush fund account to spend on whatever we want. This is where I buy my stereo equipment from, she buys her 106th purse (she likes purses), and so on. We each get $XX a week in cash for whatever, and this is how we fund these accounts. Also, any gift money or money made on the side (etc.) goes into these accounts.
We are both free to use credit cards for most incidental household expenses/gas/etc. Any purchase over $100 gets discussed. In other words, we need to agree before buying a new TV. And if I really want a bigger TV for my rec room, I need to use my slush fund money.
We pay our Credit Card bill in full every month. Period. Except for the house/cars, if we can’t truly afford it that month, we don’t buy it.
So there’s my advice. There is no mine and yours. There is no “I make more than you, so I get more” etc. There is no splitting the bill paying. It’s all together.

This is how we do it, and it works for us. And I mean really works – we have great credit, there’s no resentment, we enough money to do what we wish, etc. We are truly on the same page in our partnership, which if you think about it, is what a marriage really is.