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Choosing to adopt a child is an exciting milestone in life, but it’s also one that takes a lot of planning and effort. Future adoptive parents can opt for either a domestic adoption or international adoption, but there are a lot of differentiating factors that may influence the decision.

If you’re considering adoption, you’ll want to understand the distinctions between domestic and international adoptions, from the process and timeline to the costs involved, so you can decide what’s best for you.

The Domestic Adoption Process

One of the major advantages of choosing a domestic adoption is that you have the potential to adopt a newborn. However, the timeline is not set in stone and may depend on whether you opt for an open, semi-open, or closed adoption. Most domestic adoptions are considered at least “semi-open.”

Depending on the agency you work with, you may need to be chosen by a birth mother based on your profile. Once you’re selected, the timing depends on the expected (and actual) due date. The process usually takes a few months. Typically, you get access to the child’s medical records as well as the birth mother’s family history.

An open adoption also allows some contact and conversations with the birth mother before the baby is born. In a semi-open adoption, personally revealing information is withheld between the adoptive parents and the birth mother.

Once the baby is born and you officially adopt the child, the adoption agency may facilitate sending updates to the birth mother, as well as pictures so she can see the baby is well taken care of.

Domestic Adoption Eligibility Requirements

American adoption requirements vary by state and by the adoption agency you choose to work with. Generally, you must be at least 18 years old, and there’s often a minimum age difference required between you and the child.

Most states allow domestic adoptions regardless of marital status; parents can be married, single, divorced, or widowed and still qualify.

Explore your state and city adoption websites for more details on additional requirements unique to your area.

The International Adoption Process

International adoption, thanks to rules and clearances, typically will not involve a newborn, so you’ll need to be open to welcoming an older baby or toddler to your home.

With international adoption, there are issues that could affect your ability to adopt, even in the middle of the process. New international laws and relations between the United States and other countries have the potential to derail families who are in the middle of an adoption. The process varies by country but typically takes between 1.5 and 2.5 years.

While you can find out about the child’s medical history, you likely won’t know anything about the family history. Once you adopt a child from abroad, you won’t have any contact with the birth family.

International Adoption Eligibility Requirements

Each country has its own eligibility requirements for adoptive parents, which are typically much stricter than domestic requirements. Often you’ll need to meet income requirements, which may include a higher amount if you already have children. Some countries also have net worth requirements.

In addition, you may discover that some countries restrict the type of families that are allowed to adopt from there. For example, some only offer adoption to married couples or single women.

These rules vary by country, and there are some countries, such as Colombia, that allow single men and same-sex partners to adopt.

International vs Domestic Adoption Costs

The costs vary greatly with both international and domestic adoptions, but the common thread is that it can be expensive if you’re not adopting a foster child.

For international adoptions, expect to pay anywhere from $20,000 to $50,000, depending on the country.

In South Korea, for example, adoptions may cost between $32,000 – $38,000. In China, the range is $35,000 to $40,000. Adoptions from India may span $21,000 to $25,000.

Choosing an international adoption also requires you to travel to the country (often more than once) in advance of actually adopting your child.

Domestic adoptions through a private agency may cost between $30,000 and $60,000.

It is much less expensive, and potentially even free, to adopt through foster care. However, as a foster parent, your goal is to help reunite the child with the existing family. Adoption may become an option, but it is not the primary objective.

Recommended: Common Financial Mistakes First-Time Parents Make

Funding Options for Adoptions

Adoption costs are often out of reach for many U.S. families. But even if you can’t tap into your savings (or don’t want to), you can explore other options for funding your adoption.

Recommended: 5 Tips for Saving for a Baby

Employer Benefits

Some companies offer adoption assistance funds as part of their employee benefits packages. In addition, about 34% of employers offer paid adoption leave and 25% provide paid foster child leave. This provides flexibility to transition when a new family member arrives.

You may want to check with your HR department to make sure you don’t miss out any adoption benefits offered by your company.

Adoption Federal Tax Credit

The federal government provides some tax benefits for adoptions. First, if you use employer benefit funds to pay for the adoption, that money is excluded from your income so you don’t have to pay federal taxes on it.

The tax code also offers an adoption tax credit that can help offset some of the costs involved in adoption, whether you adopt for a domestic or international adoption. Qualified adoption expenses include things like adoption fees, legal costs, and travel expenses.

The tax credit amount changes every year, so it’s a good idea to talk to an accountant for more specifics.

There are income limits for qualifying for both the tax exclusion and credit.

Friends and Family

Many adoptive parents ask friends and family members for financial support when starting the adoption process. You could even start a crowdfunding campaign as a way for your broader community to donate to your adoption fund.

Hopeful parents may want to include a compelling personal story about the path to adoption to help draw in potential donors from their community.

Just remember that if you use a crowdfunding platform, you generally have to pay fees taken out of the money you’ve raised. This usually ranges from 3% to 8% when including both fundraising fees and processing fees.

Recommended: New Parent’s Guide to Setting Up a Will

Personal Loan

Another option for financing your domestic or international adoption is with an unsecured personal loan.

This type of loan typically comes with a fixed interest rate and repayment period, which allows you to make a set monthly payment over a set number of years.

You’ll need good credit to qualify for the best interest rates. Lenders may also take your debt-to-income ratio into consideration. You may qualify for a larger loan amount if your existing debt is low compared to your monthly income.

Sometimes referred to as an adoption loan, the proceeds from this type of loan can be used for just about anything. That means not just the agency and legal fees but also soft costs like travel and meals, which can get expensive if you’re adopting from abroad.

The Takeaway

Choosing to adopt a child can be life-changing, but an international or domestic adoption usually carries a high price tag. Fortunately, with tax benefits and funding options available, you can worry less about how to pay for all of the costs associated with the process and focus more on the joy of growing your family.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOPL0623060

The term “accessory dwelling unit” might sound foreign, but chances are you’ve encountered one. Sometimes called an in-law suite, granny flat, or, more romantically, carriage house, an ADU is a secondary dwelling unit on the same lot as a primary single-family home.

Although ADUs have risen in popularity in recent years, they’ve been around for decades, according to a study by the Federal Home Loan Mortgage Corp., known as Freddie Mac.

When the suburbs boomed in the 1950s, municipalities across the country created zoning laws prohibiting higher-density residential structures, the Freddie Mac report noted, but in cities like Los Angeles, San Francisco, and others that lacked affordable housing, the practice continued in secret.

As zoning laws across the country have changed to allow ADUs, the trend has boomed in tandem with population growth in the South and the West. “Half of our total 1.4 million ADUs are located in the Sun Belt states of California, Florida, Texas, and Georgia,” Freddie Mac reported.

What’s the attraction? Some property owners add an ADU to generate rental income; others want a place to accommodate guests, and still others need living space for aging parents.

Read on to learn why ADUs are all the rage in pricey cities and what it takes to build one.

ADU Meaning Explained

An ADU goes by many names, but its features make it unique among types of dwellings.

•   ADUs are smaller than the primary residence they accompany. In California, which passed statewide laws making many city restrictions on ADUs obsolete and streamlining the approval process, the size generally ranges from 500 to 1,000 square feet.

•   ADUs are self-contained. They usually include a bathroom, kitchenette, living area, and separate entrance.

•   ADUs require a special permit, which varies by location, according to the American Planning Association. Building codes may limit the size of the ADU and the number of occupants. Some cities, however, are offering an ADU amnesty program to help legalize under-the-radar units.

•   Unlike a duplex, ADUs usually share utility connections with the primary residence.

Recommended: A Guide to Buying a Duplex

What Are the Different Types of ADUs?

All ADUs have to follow ordinances and laws, but they don’t all look the same. Depending on homeowner preference, it might look like one of the following:

•   Detached This is likely new construction, formal or informal.

•   Converted garage This might mean retrofitting the garage or adding a second floor to create an ADU. Fans of Happy Days might recall Fonzie living in the Cunninghams’ converted garage, which was actually an ADU.

•   Attached Typically this is an addition to the existing residence.

•   Interior conversion An existing portion of the house, perhaps the basement, is transformed into an ADU. Fans of Full/Fuller House might recall the Tanners’ attic conversion and the basement/garage living space.

Benefits of an ADU

For the right homeowner, an ADU has upsides.

•   Rental income Choosing to rent out the space could bring in income, whether with a long-term rental or short-term Airbnb.

•   A true mother-in-law suite or adult-child dwelling For multi-generational families, adding an ADU could be a good way to create privacy and be close … but not too close. An ADU can also house an adult child who returns to the nest.

•   A space to age in place Conversely, aging homeowners or empty-nesters might choose to build an ADU for themselves. The homeowners could move into the smaller, more manageable space and rent out the larger property for passive income.

•   Flexibility An ADU could become a home office or art studio. For some homeowners, it might just be a good place to host guests.

•   Enhanced property value Compare the cost of buying a second small home or condo in your area with the cost of adding an ADU. How much value will a permitted habitable accessory dwelling add? A property appraisal will tell the tale.

Drawbacks of an ADU

ADUs may also come with their fair share of potential downsides.

•   Can be expensive A detached ADU may cost as much as a small house to build (though the homeowner already owns the land). An attached ADU or conversion of an existing structure will probably cost less, but still may cause sticker shock. Size, features, and the cost of professional services, permits, and any financing come into play.

•   Occupancy requirements Some local ordinances require that a home that has an ADU be owner-occupied in some capacity. That means a property with an ADU may not be the right fit for someone who wants to rent out the entire property.

•   Higher taxes On one hand, adding value to your property is a good thing. On the other, an ADU can make a property tax bill spike.

•   A smaller yard Unless a homeowner is retrofitting an ADU into their existing dwelling, building an ADU will cut down on outdoor space.

•   Financing Can be tricky. Read on.

Recommended: 8 Steps to Buying a Vacation Home

Ways to Pay for an ADU

While ADUs have different shapes and designs, they have a commonality: a price tag. If homeowners don’t have cash on hand to finance the build, they’ve got a few options to move forward.

A home improvement loan is a personal loan used to pay for a home renovation or update. When a homeowner takes out a home improvement loan, it’s not secured by the property — meaning the home isn’t collateral in the transaction.

A home equity loan or home equity line of credit (HELOC) leverages homeowners’ equity in a property and allows them to borrow money against the value of the home. Unlike a home improvement loan, a home equity loan or credit line is tied to the house, meaning the property is used as collateral. A home equity loan provides you with a lump sum of funds at one time and typically has a fixed interest rate. With a HELOC, homeowners can draw different amounts at different times, typically with a variable interest rate.

With sufficient equity in your home, homeowners could also consider a cash-out refinance.

The Takeaway

Determining if an accessory dwelling unit is the right move for a homeowner comes down to needs, preferences, and finances. ADUs have pros and cons, but many areas have eased the way for this cottage industry.

Homeowners who don’t have much equity in their property or don’t want to use their home as collateral may want to consider a SoFi unsecured personal loan to cover the cost of an ADU. SoFi’s home improvement loans range from $5K to $100K, and offer competitive, fixed rates, as well as a variety of terms. Plus, there are no fees required.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

This article is not intended to be legal advice. Please consult an attorney for advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOPL0623048

When housing costs are high, it’s hard to imagine that your home could ever go down in value. But the truth is it can, particularly if you aren’t actively maintaining your home. If you neglect small repairs, over time these issues can become large — i.e., expensive — problems that can drag down the resale value of your home.

Whether you plan to sell in the near or far-off future, here are some simple (and relatively low-cost) ways to maintain — or even increase — the value of your home over time.

Update, Update, Update

If a home that’s for sale has an updated anything, the real estate listing will scream it out in ALL CAPS. This can apply to appliances, cabinetry, countertops, flooring, bathroom remodels, kitchen remodels, and more.

If your kitchen is due for an update, try to keep in mind that this doesn’t necessarily mean stripping it to the studs and starting from scratch. Are the cabinets in good shape? Consider a fresh coat of paint or stain to reflect the latest color trends.

In addition, something as simple as upgrading to matching appliances or installing a garbage disposal or water filtration system could help maintain value — even if they’re not top-of-the-line.

Also keep in mind that “update” means bringing the home’s aesthetics into line with current styles — replacing brass fixtures for brushed bronze, for example, or swapping out carpet for wood. However, it doesn’t necessarily mean having to buy the most expensive version of that aesthetic.

Something as simple as adding some USB outlets to a room could turn it into a potential home office space.
Other, more expensive updates might adjust the actual layout of the home. If your current house only has one bathroom, is it possible to find a space for another half bath? Are there unused rooms or wasted space that could be updated to become more functional?

Recommended: 10 Small-Bathroom Remodel Ideas

Keeping Your Roof in Good Repair

Replacing a roof is costly, so it’s a good idea to do what you can to extend the life of your current roof as long as possible. A roof that shows signs of wear and tear can also be a big red flag to potential home buyers.

To maintain the value of your roof (and avoid other costly problems like leaks), you’ll want to replace any missing shingles or damaged areas as soon as possible. It’s also a good idea to have your roof cleaned regularly to remove any algae, moss, and mold that can damage the roof over time. Finally, be sure to get your gutters cleaned regularly so water can drain rather than collect on your roof.

Recommended: The Ultimate House Maintenance Checklist

Keeping Your Exterior Paint in Good Shape

Maintaining your home’s exterior paint not only helps your house look attractive and well-cared-for but also protects it from moisture. When paint starts peeling, water can find a way in, which can cause your siding to rot over time. Replacing sections of your siding can end up being a much costlier project than periodically freshening up your paint.

It’s a good idea to give your exterior paint job a look-over once a year to see if you any areas may need attention. This can help your paint job last longer and save money in the long run.

Pruning Your Trees and Shrubs

Maintaining your yard is a lot of work if you do it yourself, and costly if you hire a landscaper. But neglect can cause dead branches or an entire tree to fall in a heavy rain or wind storm, and can cause significant damage to your home. Overgrown shrubs can also bring unwanted bugs close to, and eventually inside, your home (more on that below).

It can be worth hiring a tree expert to evaluate and, if necessary, prune your trees once a year. You can regularly trim back hedges and bushes yourself or hire a landscaper to do the job.

Upgrading Energy Efficiency

Making your home more energy efficient is one of those goals that’s great not only if you’re selling, but also if you want to reduce spending on utility bills. And it doesn’t just mean big investments like switching to solar or wind-powered energy. Making your home more energy efficient can also be as simple as replacing bad weather seals, ensuring that the attic has sufficient insulation, paying attention to the air and heating systems, and using energy-efficient light bulbs and appliances.

Upgrading the energy efficiency of your home is something that might even be rolled in with another project, such as maintenance or updating.

Installing Smart Tech

Even if your home is more than 100 years old, adding smart tech can make it 21st-century ready. Smart home assistants like Google or Alexa, for example, can control everything from the lights to the TV to locking the front door.

They can also allow you to remotely control your heating and air temperatures, make sure the oven is actually turned off, and even give you a sense of security with security systems or video door bells. In order for the home assistants to accomplish all of these features, additional smart appliances may be required.

While some types of home tech are hard-wired into the house and others are more portable, even being able to say “wired for surround sound” can be a bonus on a home listing.

Smart home tech is not only quickly becoming a must-have for many homebuyers, adding it to your home can be a perk even if you have no immediate plans to move.

Recommended: What Are Common Uses for Personal Loans?

Keeping the Bugs at Bay

One important job that comes with homeownership is keeping unwanted critters outside where they belong. Public enemy No. 1 in this category? Termites. They can wreak havoc on a home’s wood structures leading to costly repairs.

The problem is so widespread that some home loan companies require buyers to get a “termite letter,” which is basically a guarantee that the home is free from termite damage.

DIY recommendations for keeping the pests at bay can also check off items on the home maintenance list, including keeping gutters and downspouts flowing, filling in any places where water pools around the home or in the yard, filling in cracks in the foundation, pruning shrubbery close to the home, and keeping air vents free and clear.

Beyond termites and the havoc they wreak, there are a variety of other living creatures that can cause damage to a home or surrounding property, including attic squatters like mice or raccoons, carpenter bees, moles, mosquitoes, and even grasshoppers that brunch on beautiful landscaping.

Recommended: What Are the Most Common Home Repair Costs?

Making Improvements Affordable

While some home maintenance projects are relatively low cost, others require a more significant investment. Before sinking a lot of money into a home maintenance or improvement project, it can be a good idea to use a Home Project Value Estimator that can help determine whether it’s a smart investment.

If you decide to move forward on the project, you’ll want to get estimates from at least three different contractors. Once you know the cost of the project, your next question may be, how are you going to pay for it?

For a small to midsize home maintenance project, you might consider using a home improvement loan. Unlike a home equity loan, these are unsecured personal loans — meaning your home isn’t used as collateral to secure the loan. Lenders decide how much to lend to you and at what rate based on your financial credentials, such as your credit score, income, and how much other debt you have.

With a home improvement personal loan, you receive a lump sum of cash up front you can then use to cover the costs of your home project. You repay the loan (plus interest) in regular installments over the term of the loan, which is often five or seven years.

If you think a personal loan might work well for your home maintenance project, SoFi could help. SoFi’s home improvement loans range from $5K-$100K and offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOPL0623034

If you’re a homeowner, there are plenty of reasons why you may want to boost your home’s curb appeal. A more attractive exterior can help make your house more appealing to buyers, and it could even boost its perceived value. Plus, adding a few simple upgrades can make your place feel more enjoyable however long you decide to live there.

Looking for inspiration? Here are five curb appeal ideas to consider.

1. Revitalize the Front Door and Mailbox

A fresh coat of paint on a front door can do wonders, and certain colors can be especially appealing. For instance, buyers tend to prefer homes with a black or slate blue door and may be willing to pay an average of $1,537 more for one, according to Zillow. On the other hand, other front door colors, such as a pale pink or cement gray, could have a negative impact on a home’s value.

This can also be the time to update the doorknob and door knocker, and any hardware on the door, including the street number. While you’re at it, what about a matching new mailbox? They even come with LED lights nowadays to do double duty.

2. Curb Appeal Landscaping

When choosing landscaping elements, keep the design of the home in mind, along with the size and slope of the lawn. A large lawn might look wonderful with shrubs that would likely overwhelm a smaller one, while eye-catching flowers might look perfect in front of a cottage-style dwelling but get lost in the shuffle in front of a big home. For curb appeal landscaping, also consider how its design moves guests in an attractive way to the front door, perhaps wending along the walkways.

Entire books can be written on curb appeal landscaping options, so enjoy exploring! While doing so, don’t forget how attractive window boxes full of blooming flowers can look. Consider integrating native flora and fauna, which have already adapted to your local climate and soil conditions and should thrive in your yard.

3. Upgrade Windows and Shutters

For a significant change in the look of a home, consider a brand-new style of windows. Options include eye-catching casement windows that are hinged to open horizontally through the use of a crank. With these windows, one side stays in place while the other side opens like a door.

Awning windows can be another interesting choice. With this style, the window swings open from the bottom while the top part stays fixed in place. Bay windows can also really make a difference in curb appeal. Also consider new shutters, perhaps ones that complement a newly painted front door.

4. Don’t Forget the Lighting

As part of curb appeal landscaping, also think about outdoor lighting that will really set off the new look. A new fixture on the porch can make a difference, aesthetically.

Along the front of the home and walkways, outdoor solar LEDs can be one option because they aren’t hard to install and can be cost efficient. They don’t create bright light, though, so they can be used as a form of supplementary lighting.

Traditional glass lanterns can be attractive, especially when paired with vintage-style bulbs. Ones that mimic the gas lanterns of the Victorian era have been trending.

5. Repair the Roof

If the roof has loose or missing shingles, this can make even the most appealing home look in need of some tender loving care. So, addressing these problems can add to curb appeal. As part of the project, check gutters and downspouts and take care of them as needed.

Costs for Upgrades

After thinking about what projects to take on, the next question to consider may be what these home remodeling projects cost.

New front door

A new door can cost under $100 for a basic hollow core choice up to $7,000 or more for a pricey wrought iron door. If you’re on a budget, you may want to consider painting an existing door and replacing hardware and a doorknob.

Landscaping

As with just about any home improvement project, curb appeal landscaping costs can vary by project. Lawn mowing services run around $55-$70 per hour on average, while laying sod could cost between $1,568 and $2,409, according to the home services website Thumbtack.

New windows

On average, new windows cost $850 on average, although this can vary by the home’s style and location. The cost for replacing all windows in a typical three-bedroom home can run between $3,000-$10,000. That said, the investment may be worth it, as new energy-efficient windows can save up to 15% of energy bills.

Roof repairs

Small roof repairs can cost between $150-$400, with labor charges of anywhere from $45 to $75 hourly. Nationally, the average roof repair costs $1,066, with a range between $379 and $1,766, according to Angi and HomeAdvisor. Repairing the gutters can come with an average price tag of $383 (falling somewhere between $193 and $620, depending on the height of the house, the gutter length and type, and repairs needed). When a full replacement is needed, figure $1,600-$2,175.

Funding Your Curb Appeal Ideas

As much fun as it is to dream of all the ways to improve the exterior of your home, just as important is how you’ll pay for the upgrades. You may decide to pay for the improvements out of a savings account or put everything on credit cards and pay off the balances in full when they’re due.

Keep in mind that if you choose to use credit cards — but are unable to pay off the balances in full when they’re due — you’ll likely be charged compound interest on the balance. And that could add to the overall amount you owe. To see how compound interest can pile up, take a look at this credit card interest calculator.

If it doesn’t make sense to use credit cards to fund curb appeal ideas, then you may want to explore a home equity line of credit (HELOC) or a personal loan.

Taking out a HELOC can make sense under certain circumstances, including these:

•   Significant equity exists in the home.

•   A large sum of money is needed.

•   Potential tax benefits are attractive.

Benefits of a personal loan include the following:

•   If the loan is unsecured, then home equity will not be tied up.

•   Fees are probably less; in some cases, there aren’t any.

•   The application process is usually easier, with the approval process typically quicker than the process for a HELOC.

What Style is My House Exterior Quiz

The Takeaway

Improving your home’s curb appeal can help make it more attractive to prospective buyers and potentially increase its perceived value. The upgrades can also make your home more enjoyable to live in, no matter how long you’re there. Certain curb appeal ideas can have more of an impact. These include freshening up the front door and mailbox, adding or improving the landscaping, upgrading windows and shutters, adding outdoor lighting, and making necessary repairs to the roof.

The cost of making exterior improvements varies based on the work you’re doing and whether you’re hiring a professional. There are different ways to fund a curb appeal project, including using savings, using a credit card and paying off the balance when it’s due, or taking out a HELOC or personal loan.

If you’re ready to roll up your sleeves and get some curb appeal work done, see what a SoFi personal loan can offer. With a SoFi Home Improvement Loan, you can borrow between $5k to $100K as an unsecured personal loan, meaning you don’t use your home as collateral and no appraisal is required. Our rates are competitive, and the whole process is easy and speedy.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL0623032

Dealing with debt can be overwhelming and stressful. If you find yourself struggling to pay off multiple debts, the snowball method can provide a practical and effective strategy to regain control of your financial situation. This method, popularized by personal finance expert Dave Ramsey, focuses on paying off debts in a specific order to build momentum and motivation.

Read on to learn how the snowball debt payoff method works, including its benefits, plus alternative payoff strategies you may want to consider.

Building the Snowball

With the snowball method you list your debts from smallest to largest based on balance and regardless of interest rates. The goal is to pay off the smallest debt first while making minimum payments on other debts. Once the smallest debt is paid off, you roll the amount you were paying towards it into the next smallest debt, creating a “snowball effect” as you tackle larger debts.

Getting rid of the smallest debt first can give you a psychological boost. If, by contrast, you were to try to pay down the largest debt first, it might feel like throwing a pebble into an ocean, and you might simply give up before you got very far.

A Word about Paying off High-interest Debt First

From a purely financial perspective, it might make more sense to first tackle the debt that comes with the highest interest rate first, since it means paying less interest over the life of the loans (more on this approach below).

However, the snowball method focuses on the psychological aspect of debt repayment. By starting with the smallest debt, you experience quick wins and a sense of accomplishment right away. This early success can then motivate you to continue the debt repayment journey. In addition, paying off smaller debts frees up cash flow, allowing you to put more money towards larger debts later.

Recommended: How to Get Out of $10,000 in Credit Card Debt

Making Minimum Payments Doesn’t Equal Minimum Payoff Time

While you may feel like you’re making progress by paying the minimum balance on your debts, this approach can lead to a prolonged payoff timeline. The snowball method encourages you to pay more than the minimum on your smallest debt, accelerating the repayment process. Over time, as you pay off each debt, the amount you can allocate towards the next debt grows, increasing your progress.

The Snowball Plan, Step By Step

Here’s a step-by-step guide to implementing the snowball method.

1. List all debts from smallest to largest. You want to list them by the total amount owed, not the interest rates. If two debts have similar totals, place the debt with the higher interest rate first.

2. Make minimum payments. Continue making minimum payments on all debts except the smallest one.

3. Attack the smallest debt. Put any extra money you can towards paying off the smallest debt while making minimum payments on others.

4. Roll the snowball. Once the smallest debt is paid off, take the amount you were paying towards it and add it to the minimum payment of the next smallest debt.

5. Repeat and accelerate. Repeat this process, attacking one debt at a time, until all debts are paid off.

A Word About Principal Reduction

It’s a good idea to reach out to your creditors and lenders and find out how they apply extra payments to a debt (they don’t all do it the same way). You’ll want to make sure that any additional payments you make beyond the minimum are applied to the principal balance of the debt. This will help reduce the overall interest you pay and expedite the debt payoff process.

Perks of the Snowball Method

The snowball method offers several advantages:

•   Motivation and momentum The quick wins and sense of progress provide motivation to continue the debt repayment journey.

•   Simplification Focusing on one debt at a time simplifies the process, making it easier to track and manage.

•   Increased cash flow As each debt is paid off, the money previously allocated to it becomes available to put towards the next debt, accelerating the payoff timeline.

Alternatives to the Snowball Method

While the snowball method has proven effective for many, it’s not the only debt repayment strategy available. Here are three alternative methods you may want to consider.

The Avalanche Method

The avalanche method involves making a list of all your debts in order of interest rate. The first debt on your list should be the one with the highest interest rate. You then pay extra on that first debt, while continuing to pay the minimum on all the others. When you fully pay off that first debt, you apply your extra payment to the debt with the next highest interest rate, and so on.

This method can potentially save more on interest payments in the long run. However, it requires discipline and may take longer to see significant progress compared to the snowball method.

The Debt Snowflake Method

The debt snowflake method is a debt repayment method you can use on its own or in conjunction with other approaches (like the snowball or avalanche method). The snowflake approach involves finding extra income through a part-time job or side gig, selling items, and/or cutting expenses and then putting that extra money directly toward debt repayment. While each “snowflake” may not have a significant impact on your debt, they can accumulate over time and help you become free of high-interest debt.

Debt Consolidation

If the snowball, avalanche, or snowflake methods seem overwhelming, you might want to consider combining your debts into one simple monthly payment that doesn’t require any strategizing. Known as debt consolidation, you may be able to do this by taking out a personal loan and using it to pay off your debts. You then only have one balance and one payment and, ideally, a lower interest rate, which can help you save money.

Recommended: How Refinancing Credit Card Debt Works

The Takeaway

The snowball method offers a practical and motivational approach to paying down debt. By starting with small debts and building momentum, you can gain control of your finances and work towards becoming debt-free.

However, it’s important to choose a method that aligns with your financial goals and personal preferences. Whichever method you choose, the key is to take action and commit to a debt repayment strategy that works for you.

If you’re interested in exploring your debt consolidation options, SoFi could help. With a lower fixed interest rate on loan amounts from $5K to $100K, a SoFi personal loan for debt consolidation could substantially lower how much you pay each month. Checking your rate won’t affect your credit score, and it takes just one minute.

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