Money is a funny thing. You never have it. You always want it. It’s fun to spend. It’s hard to earn. It feels like it’s impossible to save. And whether you want to or not, you’ll have to get loans for some of the bigger purchases in your life. Ideally, you want to be absolutely as responsible as possible when you run into these big money situations.
And three of the largest will come to mind right away. You will probably have to get a home loan. You will probably have to get an education loan. And you will probably have to get a car loan. Between those three, that’s some heavy debt. It’s very unlikely that you’ll be able to pay cash for any of those purchases, which is why you have to be smart about the personal finances involved in them.
Start with home loans. This will probably be the largest purchase in your life. You lived with mom and dad. You went off to college and got an education. And then you have to find somewhere to live. Maybe you rent an apartment for a little while or have a roommate in a house. But at some point, you’re going to have to purchase a house if you want to level up. Especially if you’re starting a family, you’re going to want to pick a home that has enough rooms and enough space for you to grow into.
Depending on how good your credit is, you may have various amounts that you can get a loan for, and you have to be very careful about your down payment as well.
Before you get a house, though, there is a good chance that education is going to cost you some serious cash. You almost have to get an education loan, because the cost of college these days is absurd. Even a generation ago, it was possible to pay for college while you were working part-time.
Now you’re lucky if you can pay for college within ten years of you graduating. For better or worse, you have to let this fact go to get your degree in the first place. Get as much financial aid as you can, and then worry about the ramifications of debt later when you have a great job.
One of the first loans you may have to get is with your car purchase. The first car you buy might be a junker. Your confidence on the road may suggest that it’s better to purchase something cheap. However, when you’re ready to get a nice car, it’s doubtful that you’ll have the cash just lying around. That’s why deciding to get a vehicle financed with a loan is a very typical process.