There are things in life that you may want that will cost a lot of money, so they are not things you can choose to buy on a whim or without careful planning. When you don’t carefully plan out major expenses, you get into debt that you can’t handle, which can damage your finances for a long time. It even causes some to file bankruptcy, which damages their credit scores.
Here are three major life expenses and how to pay for them.
1. College
One of the best ways to get college paid for is by getting scholarships to cover the cost of tuition, books, and fees. This is not something you can wait until college to start applying for. You should research and look into scholarships when you start high school, if not sooner, to know what your options are going to be. Organizations like the National Society of High School Scholars (NSHSS) offer scholarships for high school juniors that will be available when they start college. While most people think of sports or high academics as being needed for getting scholarships, that is not the case. There are opportunities based on financial need, community service, essay writing, and various demographic factors.
You can also fill out and submit the FAFSA form to see if you qualify for federal financial aid, which will cover a portion of your tuition. The FAFSA will also qualify you for federal student loans to cover the remaining portion of your tuition. While students loans aren’t ideal, they are an effective way to pay for college until you get a job that will allow you to pay back that money.
2. House
Buying a house is an enormous investment and one that you must plan for. For a conventional loan, you’ll need a credit score of over 630 and at least 10 to 20 percent to use as a down payment. However, there are many other options for buyers who don’t have enough for a full down payment or have a credit score of less than 630. You can do an online search for “private lenders near me” to find hard money lenders like Northwest Private Lending. They will provide a loan for a cash-only listing, which is not open to conventional mortgage loans. Private lender mortgage loan requirements are different from those for conventional loans, so it may be a better option for some.
3. Car
Buying a car requires planning because you will need to know what kind of car you want and what your price range is going to be. You also need good credit and a down payment for the car loan. The more you can put down on the vehicle, the lower your monthly payments will be for the loan, which will help you in the long run. You’ll need to ensure you are budgeting in the car payment, as well as the cost of full coverage insurance to make sure you can afford the vehicle. You can get a car loan through a traditional lender like a bank or a private lender. Some car dealerships even offer their own private lending services.
While these major life expenses are significant, and you don’t want to put yourself in debt, you have to view these as an investment in yourself and your future. For example, your college degree will give you the tools you need to get a high-paying job. The house will gain equity value the longer you own it and will increase your overall value. The car won’t increase or maintain value but will still hold some value, allowing you to trade it in or sell it when you want a new vehicle.
