by Emily Hechler 
Talking about money can be taboo, but it doesn’t have to be. One person could celebrate paying off their auto loan while another is celebrating because they got approved for an auto loan. Everyone goes through different seasons in their life. The same is true for money. Living with debt to pay off for a variety of reasons is normal. We’re here to help you learn what you need to know when getting into debt and when you’re trying to get out of debt.
What are My Loan Options?
Personal Loans are great options for people who need money in a pinch. With varying terms and interest rates, you can find the combination that fits your specific needs. Since the interest rate fixed, a Personal Loan is a stable and predictable choice. There are other options that can suit similar needs, but eligibility for these are different.
Personal Loan
For major purchases, such as new furniture for your living room or a dream vacation, a Personal Loan can make the cost more manageable. Instead of paying the full amount upfront, you can spread the expense over several months, making it easier to handle financially. This is a more sustainable option that maxing out your credit card, which can hurt your credit score.
Unexpected medical bills, whether from an emergency or ongoing situation can add up quickly. A Personal Loan can help you cover the costs, allowing you time to focus on your recovery while ensuring that you are paying for your hospital or other medical bills in the process.
Speaking of emergencies, other situations like storm damage to your home or expensive car repairs arise unexpectedly. When something like this happens, you might not have the funds needed to cover the cost. A personal loan could help relieve the stress of the situation by paying for your fixes a month at a time rather than all at once at the time of repair.
Home Loans
After living in your home for a while, you might want to make some upgrades. If you have substantial equity in your home, you can use it to your advantage. A Home Equity Loan and Home Equity Line of Credit, or HELOC, both use your home’s equity as collateral to secure a low interest rate. For homeowners without a lot of equity, a Home Improvement Loan can be used to fund house projects. If you don’t qualify for the various home loans, a Personal Loan is a great alternative, so you can still make the improvements you want or need.
Consolidating Loans
Most Americans have some kind of debt like mortgages, credit cards, Auto Loans, and furniture financing… you get the idea. Juggling varying loan amounts from different lenders with due dates scattered across the month can be overwhelming. A Personal Loan from Alltru can be used to consolidate these loans into one. This way, you’ll make one larger payment each month that will go towards the total of your other loans. Another option is to transfer your credit card balance to a low-rate credit card that comes with an even lower introductory rate.
Managing Debt and Ensuring Protection
While managing Personal Loans and debt is important, it’s also crucial to consider protecting yourself and your loved ones against unexpected events. That’s where Debt Protection comes in. You may have been offered to sign up for Debt Protection when you secured your latest loan. If you have a loan and don’t have Debt Protection, you can add it with Alltru. It’s a hassle-free addition that only costs a little more each month and can be added to your current payment.
What It Is
Debt Protection is a type of insurance that may cancel your loan balance or payments for you or your family members in the event of involuntary unemployment, disability, or even death. In short, it keeps your family from having to pay off your debt in the case of a drastic life situation. Adding debt protection to your loan is a great ideal if you have a history of illness or still have several years left of a loan term.
How It Works
With debt protection, your coverage starts immediately. There is no waiting period until the insurance kicks in. So, if the unthinkable were to happen to you shortly after adding debt protection, you can rest assured that you and your family are financially covered. All you have to do is submit a claim to start.
When to Add More Coverage
For extra reassurance, you can add debt protection to cover a wide range of situations including accidental dismemberment, terminal illness, hospitalization, family medication leave, and death of a non-protected dependent. These events can create significant financial challenges, and having debt protection in place ensures that you’re better prepared for such uncertainties. It’s better to be safe than sorry.
Tips for Managing Debt
While Debt Protection is available to financially safeguard you and your family, hopefully you won’t need it. With time and discipline, you will pay off your loans. You can practice steps into your financial life to live like someone who is debt free. Starting these steps now will make it easier to keep following them when you make that last monthly payment on your loan term and become debt free.
Avoid Impulsive Purchases
Avoiding impulse spending can be tricky, but people who live debt free know it’s possible. If you think you need something, wait for a predetermined period of time before buying it. In the meantime, do you research and see if you can find a better price or a cheaper substitute. Best of all, you might discover that you don’t need or want the item anymore. This is easier for me to follow when I go shopping with a list. Buying something that isn’t on the list isn’t an option. That means I have to make another shopping trip just to get that item. It forces me to question whether the cost is worth it.
Watch Your Accounts Closely
Monitor your finances closely. If you aren’t paying attention, you can easily overdraft your account and have to pay a fee. Worse, you could have undetected fraud charges toward your account. Look at your monthly statements. Take note of what you actually spend your money on. Notice a monthly subscription charge for something you haven’t used in a while? Now is a great time to cancel and start saving.
Choose the Right Card
Use your debit and credit cards wisely. Use your debit card as much as possible. Charging your everyday purchases to your debit card allows the money to come out of your account right away. This way, you won’t have a massive credit card bill to pay at the end of the month. If you do use your credit card regularly, pay your balance in full at the end of each month. This prevents you from having to pay interest and losing your safety net if you need your credit card for an emergency.
Live Like You Make Less
Living below your means may be uncomfortable for a while, but debt free people know it’s a must. Just because you have enough money in your account to pay for fun experiences and HomeGoods and Cabella’s runs every weekend, doesn’t mean that you should. Living below your means allows you to save money more easily. You can use this money on anything in the future such as emergency expenses, a vacation, or even retirement.
Save Automatically
To make living below your means a little easier, automate your savings. You can set up automatic savings with Alltru in a variety of ways. You can have a percentage or dollar amount put in your savings account with your direct deposit. Or, you can set up recurring automatic transfers for whatever time frame you choose. With Alltru’s RollUp Savings account, we round up to the next dollar for every purchase you make and put the change in a dedicated RollUp Savings account. This way, you’re saving money while growing interest without even thinking about it.
Make Goals
According to Gallup, 69% of adults create financial goals. Those without debt create goals like saving cash for a car or maxing out annual retirement contributions. Since we’re not there yet, our goals will look different. Here are a few ideas to start:
- Pay off the student loan by the end of the year
- Save $7,000 for a car down payment over the next 18 months.
- Keep credit card utilization at 30% for the next 6 months.
The key to setting goals is that they’re concrete. These goals have real dollar amounts and timelines tied to them. This will help you budget how you can meet these goals.
Ask for Help
Sometimes, it just takes talking to someone to get some help. You can start by talking to friends and family who feel like they have control of their debt and ask what they did. You can talk to lenders and service providers to see if you can get a lower rate or discounted bundle. Every dollar you “save” is another dollar you can put toward paying off your loans.
Stay in Control of Your Debt
Whether you’re taking on new debt or working on paying it off, Alltru is by your side every step of the way. Reach out to our Certified Credit Union Financial Counselors for personalized assistance for navigating your financial situation. We’ll create goals with you so you can get to where you want to be. Let’s get you in control of your finances.
