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From unemployment benefits to hardship programs, there are a number of options out there when it comes to managing money during difficult times. One option that people may consider during unemployment is a personal loan. But one important question is: Can you get a loan while unemployed?

While there are personal loans for the unemployed available, it’s important to carefully assess the downsides and the benefits before moving forward. You’ll need to ensure you’ll be able to pay back the loan even if money gets tighter, and you should also be prepared for a more challenging approval process.

Personal Loan Basics

At its most simple, a personal loan is when a lending institution pays out a lump sum of money to a borrower, who then pays back the amount owed plus interest over a predetermined period of time.

Unlike a mortgage or student loan, a personal loan isn’t tied to a specific expense. In other words, someone might take out a personal loan to cover the cost of paying for a dream wedding, to remodel a kitchen to get rid of that hideous linoleum, or to cover living expenses during a time with low cash flow — there are a number of common uses for personal loans.

Personal loan amounts can typically vary from $1,000 to $100,000, depending on the lender’s guidelines, the amount a borrower requests, and the borrower’s creditworthiness. While the lender pays out the amount of the loan in one lump sum to the borrower (minus any origination fee), the borrower pays back the loan over time in installments, often over a period of 12 to 60 months.

Personal loans are generally unsecured loans, which means they do not use collateral to secure the loan. Instead, lenders may look at borrowers’ creditworthiness to determine the risk in lending to them and their interest rate.

The interest rate for personal loans can vary for different borrowers depending on a borrower’s creditworthiness. Rates can range anywhere from around 5% to over 35%. Interest is paid back alongside the principal amount in monthly payments that are made over the life of the loan.

When Should You Consider Taking Out a Personal Loan While Unemployed?

Ideally, you’d avoid taking on debt while you’re unemployed and don’t have regular income coming in from a job. You might first explore any other options available to you to free up funds, whether that’s taking on a side hustle, getting a roommate, or reassessing your budget. However, there are some circumstances when taking out a personal loan while unemployed may be doable, and it can be a better option than resorting to a high-interest payday loan or expensive credit card debt.

If you’re considering a personal loan while unemployed, you should first assess whether you’ll realistically be able to make on-time payments on your loan each month. Not doing so can lead to late fees and impacts to your credit score. Think seriously about what you’d do in the worst-case scenario if you really couldn’t make a payment. You may even consider crunching the numbers using a personal loan calculator to determine if a personal loan would net you any savings over another borrowing option.

It’s also important to understand what lenders will look for when determining whether to approve you for a loan while unemployed. You’ll generally need a strong credit history and credit score to qualify. Additionally, lenders will want to see some income in order to prove you’ll be able to make monthly payments. Without a regular paycheck coming in during unemployment, this could be Social Security benefit payments, disability income, money from investments, or even your spouse’s income, among other alternatives.

Are There Downsides to Taking Out a Personal Loan While Unemployed?

Taking out a personal loan may seem appealing to someone who is temporarily out of work because it might be relatively quick to secure and can come with lower interest rates than credit cards. But as with all financial decisions, it’s important to understand the pros and cons of taking out a personal loan while unemployed before applying.

Here are the downsides of taking out a personal loan while unemployed:

•   It will likely be harder to qualify for a loan while unemployed. While you can get a personal loan without a job, it may be more difficult to qualify. Lenders look at a variety of factors when determining whether to offer a borrower a loan, like income, debt-to-income ratio, credit history, and credit score. This data helps them determine how likely it is the borrower will pay back the loan. If a borrower is unemployed, they won’t necessarily have income to show, and their debt-to-income ratio might be much lower than it would be with a stable income. Of course, different lenders have different criteria for lending, and the ultimate decision is determined by that specific lender.

•   Lenders may charge higher interest rates. Some lenders may offer higher interest rates to unemployed personal loan borrowers. This is because of the additional perceived risks of lending to someone who is unemployed.

•   Borrowers are taking a risk. The risk isn’t just for lenders when getting a loan while unemployed. When deciding whether to apply for a personal loan during unemployment, it’s important to consider your ability to pay a higher interest rate or make monthly payments. If a borrower is struggling to make ends meet, a loan payment could be impossible to pay on top of other expenses. And defaulting on a personal loan can be even more expensive: Borrowers could face late fees for missed payments and fees if the loan is sent to collections, not to mention a hit to their credit score if they’re unable to make payments.

Are There Benefits to Taking Out a Personal Loan While Unemployed?

There may be upsides for someone who is unemployed to take out a personal loan. Benefits of personal loans for unemployed individuals can include:

•   Personal loans can be more flexible than other types of loans. Borrowers can use the money from a personal loan for almost anything. This might make it an appealing choice for borrowers who may not have their normal income coming in due to unemployment.

•   It may be less costly than other borrowing options. A personal loan may come with lower rates than a credit card, which can be a major benefit when it comes to saving money. Additionally, the fixed term of a personal loan could help borrowers save over the life of a loan. This is because unlike with a credit card, you’d pay a set amount monthly over a set term, which means payments don’t roll over and continue to accrue interest.

•   You could consolidate existing debt. Another potential benefit of taking out a personal loan during unemployment could be consolidating other debts. In fact, a common reason borrowers may choose a personal loan is to consolidate credit card debt. Sometimes called debt consolidation loans, this type of personal loan can help borrowers save money if they can secure a lower interest rate than they’re currently paying on their credit cards. Additionally, debt consolidation loans can streamline multiple payments into one monthly payment. Keep in mind, however, that continuing to use credit cards after obtaining a credit card consolidation loan can lead to debt continuing to pile up.

•   They can help you deal with unexpected expenses. Personal loans may be an option for borrowers who are facing unexpected expenses, like medical bills or moving costs. If your current financial situation or a change in jobs has necessitated a move, a personal loan may be a way to pay for those unexpected costs without relying on credit cards.

To recap, here’s a rundown of the downsides and benefits of personal loans for unemployed individuals. While you potentially can get a loan while unemployed, you’ll want to make sure you’re aware of and comfortable with both the pros and the cons:

Downsides and Benefits of Personal Loans While Unemployed
Downsides	Benefits
Qualifying can be more difficult.	Personal loans offer flexibility in how you use the funds.
Interest rates may be higher due to unemployment status.	It could be less costly compared to other choices.
Borrowers are taking on a risk amid existing financial uncertainty.	You could use a loan to consolidate debt, and potentially save money.
	It could help you cover unexpected costs, like medical bills or moving.

Does SoFi Offer Personal Loans for Unemployed People?

SoFi does offer personal loans for unemployed individuals, assuming applicants meet other conditions. If you are not currently employed, it’s necessary to meet one of the two following eligibility criteria:

•   Have sufficient income from other sources

•   Have an offer of employment to start within the next 90 days

Beyond these conditions regarding employment and income, SoFi also has a number of other requirements that borrowers must meet. Additionally, SoFi will consider an applicant’s financial history, credit score, and monthly income vs. expenses.

Improving Your Chances of Getting Approved for a Personal Loan While Unemployed

If you’re hoping to get a personal loan while unemployed, there are steps you can take to increase your odds of getting your personal loan approved.

For one, it helps to familiarize yourself with your own financial situation. Check your credit to see if it falls within a lender’s requirements, assess your current sources of income now that you’re unemployed, and take a look at how your current monthly debt payments compare to your monthly income. These are all factors that lenders will take into account when determining whether to approve the loan application, so the better they look, the better your chances that the lender’s answer will be a yes.

If you’re not confident you can get approved for a personal loan with your financial situation as is, you might consider taking some of the following actions:

•   Increase your income: While this might seem like a no-brainer if you’ve recently lost your job, there are other ways to approach adding to your sources of income while you’re on the job search. You could pick up a side hustle or get a roommate. Also take the time to review what counts as income for credit card applications — you might find you’ve forgotten to include something. (Remember, unemployment benefits count as income.)

•   Minimize your debts: If your debt-to-income ratio is way out of whack, that could lower your odds of approval. Consider ways you could cut costs, whether that’s downsizing your home, moving in with a friend or family member in the meantime, or selling off a car that’s saddling you with monthly payments.

•   Consider adding a cosigner: In this situation, another option could be to ask a friend or family member with good credit and a steady income to serve as a cosigner. Adding them to your application may make it likelier that a lender will view you favorably. Just remember that if you fail to make timely payments on your loan, you could damage your cosigner’s credit and stick them with the payments — not to mention the harm it could do to your relationship.

Choosing a Personal Loan

Borrowers interested in a personal loan might want to consider all the pros and cons before taking one on during unemployment. If a personal loan sounds like it might be the right solution, borrowers may want to do a little bit of preparation beforehand. It’s never a bad idea for a borrower to figure out exactly much they want to borrow in advance. But remember — borrowers should only borrow the amount they need.

Taking a look at the affordability of monthly payments may also help a borrower determine how much to borrow. Additionally, borrowers may wish to pull up their financial documents and take a peek at their current credit score and overall financial health before applying for a personal loan.

If a borrower is ready to apply, it’s important to look for one that meets their specific needs. For one, they’ll need to find a lender willing to work with unemployed borrowers, if that’s their current situation.

With SoFi, the next step in applying is to get prequalified. Prequalification with SoFi doesn’t affect your credit score and lets you see what interest rate you may qualify for. While SoFi offers easy online prequalification, it’s important to look around and determine which, if any, personal loan is the best for you.

With SoFi, you may qualify for a personal loan for between $5,000 and $100,000 with no origination fees required. Plus, if you take out an unsecured personal loan and then lose your job, you may be eligible for forbearance on your payments and assistance finding a new job in the meantime.

The bottom line: While applying for a personal loan with SoFi is possible, you should properly assess the associated risks first — especially if you’re getting a loan while unemployed.

FAQ

Can you use a personal loan as an unemployment loan?

Yes, it is possible to use a personal loan as an unemployment loan. However, in order to qualify for a personal loan while unemployed, you’ll still need to meet a lender’s eligibility requirements. This generally includes demonstrating some type of regular income.

What are the benefits of using an unemployment loan?

While risky, personal loans for unemployment do offer a number of benefits, including flexibility in how you use the funds, potentially lower costs than other borrowing options, and the choice to consolidate existing debt. A personal loan could also come in handy if unexpected expenses arrive, such as a surprise medical bill or an unanticipated move.

Are there any fees associated with unemployment loans?

Personal loans taken out during unemployment can absolutely carry fees. Whether and which fees apply will depend on the lender. Common fees you could face include origination fees, late fees, and prepayment penalties.

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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

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.

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.

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Challenges to Biden’s student loan forgiveness plan have created uncertainty and confusion for the more than 40 million borrowers (including college students who were enrolled before June 30, 2022) who may be eligible for debt relief through the program.

On Thursday, Nov. 11, a U.S. District judge in Fort Worth, Texas, ruled in a lawsuit that the plan is unconstitutional. As a result, the Department of Education has stopped accepting applications for student loan forgiveness and is holding the applications it has already received. The Biden administration is appealing the judgment.

To help borrowers in the meantime, on Nov. 22, the U.S. Department of Education issued a new extension of the pause on student loan repayment, interest, and collections to let the Supreme Court rule on whether the forgiveness plan can go into effect. Federal student loan payments may now be extended as long as 60 days after June 30, 2023. The pause is meant to “alleviate uncertainty for borrowers,” according to the administration.

Legal Challenges to the Student Loan Forgiveness Plan

The President’s debt relief plan calls for up to $10,000 in forgiveness for federal student loan borrowers who earn less than $125,000 a year ($250,000 for married couples) and up to $20,000 in relief for Pell Grant recipients. As mentioned earlier, current students who were enrolled before June 30, 2022, may be eligible for this one-time forgiveness. (Borrowers of private student loans are not eligible.)

The Biden administration determined that the president has the authority to wipe out this kind of student debt under the Heroes Act of 2003. Passed in the wake of the 9/11 terrorist attacks, the Higher Education Relief Opportunities for Students Act gives the Secretary of Education the authority to change federal student aid provisions in the event of a war, military operation, or national emergency.

Because the pandemic was declared a national emergency in March 2020, the administration believes that the Education Secretary has the legal authority to provide debt relief under the act. Both former President Trump and President Biden used the Heroes Act to pause student loan payments during the pandemic. The extension that was just announced on Nov. 22 extends the pause well into 2023.

Six lawsuits have been filed against the plan resulting in two blocks against it. Opponents challenging Biden’s student loan forgiveness program make three primary legal arguments against the administration’s premise:

The No-Worse-Off Clause

Some politicians and legal experts question whether using the Heroes Act is appropriate. Among other things, they point to a clause in the act that says action on student financing can only be taken to ensure people “are not placed in a worse position financially” because of the emergency. The student loan pause, for instance, is designed to make sure that borrowers are no worse off when repayment starts than they were when the pandemic began. However, opponents argue that forgiveness puts borrowers in a better position financially because they will no longer have to pay all or part of their student loans.

Congress Controls the Money

Many lawmakers opposed to the program also say the Biden administration is overstepping its reach. The debt cancellation program could cost as much as $519 billion dollars over 10 years, according to some recent estimates. The Constitution states that Congress controls government funds, and the president and federal agencies may not spend money that has not been appropriated by Congress. Although Congress itself has enacted several specific student loan forgiveness programs — such as those for teachers or permanently disabled borrowers — it has not passed a broad student loan program forgiveness plan.

A Recent Supreme Court Decision

Activities of federal agencies like the Department of Education may come under more scrutiny in the wake of the recent U.S. Supreme Court decision regarding West Virginia v. Environmental Protection Agency. That decision clarified the “major questions doctrine,” which says that federal agencies are limited in making decisions that have “vast economic and political significance” without guidance from Congress. Proponents of the loan forgiveness plan worry this doctrine will be used against the program. Opponents believe they have legal precedent.

Recommended: Student Loan Forgiveness Programs

What Happens Next With the Legal Challenges?

On November 14, the 8th U.S. Circuit Court of Appeals granted an injunction request by six states to halt the debt relief plan. The Biden administration has asked the Supreme Court to put that decision on hold as well as the November 11th Texas District Court ruling. The U.S. Justice Department also suggested that the Supreme Court separately take up the case of student debt relief during its current term.

Whether Biden’s student loan forgiveness plan will happen is still up in the air. As the legal challenges play out, borrowers can sign up for updates at the DOE’s Student Aid site.

Recommended: Will My Federal Student Loan Payment Change in 2023?

Logistical Challenges to the Student Loan Forgiveness Plan

In addition to the lawsuits, there are other challenges to overcome in implementing the program. Dealing with millions of dollars of canceled debt at numerous different loan servicing companies may be difficult if the plan proceeds. Right after the August announcement of the student loan forgiveness plan, the Department of Education’s financial aid website crashed, as did the sites of many loan servicers. That raises questions about how prepared the government and the private loan servicers are to handle the onslaught of forgiveness activity.

Recommended: Types of Federal Student Loans

The Takeaway

The Biden administration’s plan to forgive a large chunk of federal student debt was welcome news to borrowers. But it came with significant legal challenges, resulting in six lawsuits (so far). The Biden administration has asked the Supreme Court to rule on whether the plan can go into effect. To help borrowers, the pause of student loan repayment has been extended again. SoFi will continue to keep you updated on developments with the student loan forgiveness program.

In the meantime, you may want to consider how best to handle your student loan debt. Even if you are eligible to have a portion of it forgiven, you will still need to pay off the remainder of your loans. Or perhaps you have private loans, which don’t qualify under the forgiveness program. Refinancing your student loans might lead to lower monthly payments. And that’s especially important to think about now, as interest rates continue to rise. Explore student loan refinancing with SoFi to see what your options are.

FAQ

Will Biden student loan forgiveness stand in court?

It’s uncertain whether the student loan forgiveness plan can stand in court. Currently, six lawsuits have been filed against the plan, and the administration has asked the Supreme Court to rule on whether the plan can go into effect.

Who would challenge Biden’s student loan forgiveness?

Many Republican lawmakers, some Democratic lawmakers, and some economists and education experts are against the plan. Six lawsuits have currently been filed against it.

What are the possible delays to Biden’s student loan forgiveness?

Legal challenges have put the plan on hold. The Department of Education has stopped accepting applications for student loan forgiveness and is holding the applications it has already received.

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Photo credit: iStock/Inside Creative House

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

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.

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.

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Your mom wants something surprising for the holidays this year. And so does your dad. In our holiday gift survey, we asked parents and grandparents to reveal the number-one present they hope to find under the tree this season. What they told us is going to make your holiday shopping very merry and bright.

In past years, you probably spent a lot of time searching online and in stores for the perfect Christmas gift ideas for parents and Christmas gift ideas for grandparents. This year, there’s no need to stress out about it because you’ll know exactly what to buy.

So what do mom and dad want you to get them? And what do grandparents want for Christmas? In our survey, we asked 1,000 of them (250 of each — moms, dads, grandmothers, and grandfathers) to share the holiday present they really want this season — and what they don’t want. Here’s what they told us; consider these survey findings our gift to you.

Source: Based on a What People Actually Want This Holiday Season survey of 1,000 U.S. adults from October 26, 2022 to October 27, 2022.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Gift Cards Are the Favorite Gift by Far

The number-one gift requested by moms, dads, grandmothers, and grandfathers is … a gift card! And it wasn’t even close. Gift cards were the most-requested gift across the board.

Almost 33% of respondents picked gift cards as their most-wanted holiday gift. Here’s how it breaks down across the generations:

•   Moms: 39%

•   Dads: 31%

•   Grandmothers: 34%

•   Grandfathers: 27%

The Type of Gift Card You Give Makes a Difference

There are all kinds of gift cards to choose from, including gift cards for restaurants, stores, and airlines, to name just a few. So, as you get ready to shop and celebrate the holidays without blowing your budget, which type should you get for your parents and grandparents?

A gift card that can be used anywhere, like a Visa gift card, was the top choice, selected by:

•   45% of moms

•   44% of grandmothers

•   40% of grandfathers

•   38% of dads

The one group that wants a different kind of gift card? Moms ages 35 and up. They preferred a gift card to a retailer like Target, Amazon, or Walmart.

The way gift cards function is similar to how credit cards work, since your parents and grandparents can use them to buy whatever they like. Perhaps that’s why they were so popular in our survey: Your relatives can pick out exactly what they want.

Skip the Fancy Jewelry

You might think mom would be thrilled with luxury goods like an expensive necklace, bracelet, or earrings, but jewelry is actually at the very bottom of her list. When asked the gift they wanted least, most moms (22%) said fine jewelry. Dads agreed — 21 percent chose fine jewelry, such as a watch, as their least favorite holiday gift.

Grandparents also said no thanks to fine jewelry:

•   26% of grandmothers picked it as their least favorite gift

•   21% grandfathers chose at gift they wanted least

Recommended: Secrets to Not Paying Full Price

Holiday Gift Ideas for Mom

Here’s what Mom wants most:

•   A gift card: 39%

•   No gift at all — she just wants to spend time with family: 14%

•   An experience (like a concert or vacation): 10%

•   Clothes or shoes: 9%

•   A homemade gift like a photo collage: 7%

•   Electronics: 6%

•   Jewelry: 6%

•   Home goods: 5%

•   Donation to a charitable organization: 3%

•   Beauty/Health products: 2%

Holiday Gift Ideas for Dad

Here’s what dad wants most:

•   A gift card: 31%

•   Electronics: 14%

•   No gift at all — he just wants to spend time with family: 12%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 10%

•   Jewelry: 9%

•   A homemade gift like artwork: 5%

•   Donation to a charitable organization: 4%

•   Home goods: 2%

•   Beauty/Health products: 2%

If you’re thinking about getting dad the electronics he wants, but you don’t have the cash to pay for the gift upfront, applying for a credit card, and charging the electronics to it, is an option you may want to consider.

Holiday Gift Ideas for Grandmothers

•   A gift card: 34%

•   No gift at all — she just wants to spend time with family: 22%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 8%

•   A homemade gift like artwork: 6%

•   Electronics: 5%

•   Jewelry: 4%

•   Donation to a charitable organization: 3%

•   Home goods: 3%

•   Beauty/Health products: 2%

Holiday Gift Ideas for Grandfathers

•   A gift card: 27%

•   No gift at all — he just wants to spend time with family:14%

•   Electronics: 12%

•   An experience (like a concert or vacation): 10%

•   A homemade gift like artwork: 10%

•   Clothes or shoes: 8%

•   Donation to a charitable organization: 8%

•   Home goods: 5%

•   Jewelry: 4%

•   Beauty/Health products: 2%

Recommended: 41 Charities to Support This Year

Who Buys the Best Gifts?

It’s unanimous: Moms, dads, grandmothers, and grandfathers all agree that their spouse or partner is tops when it comes to choosing holidays gifts. No other person even comes close.

Who Gives the Best Gifts?

•   Spouse/partner: 37%

•   Parents: 18%

•   Friends: 10%

•   Siblings: 9%

•   Other relatives: 9%

Whose Gifts Rate the Worst?

Ranking at the bottom of the best gift-giver list: In laws and bosses. Only 4% of respondents said their mother-in-law and father-in-law give good gifts, and just 1% said their boss does.

Regifting is Real — and It Can Be Pretty Awkward

There’s a lot of regifting going on: 41% of our respondents admitted they’ve done it. But when the tables are turned on them, things can get a little uncomfortable. Fortunately, many have a sense of humor about it.

Almost 1/3 of Moms Have Been Regifted a Gift They Gave First

•   68% thought it was funny

•   32% were hurt, annoyed, or mad

Yet this didn’t deter them from doing it themselves: 38% of moms have regifted what they didn’t want. Most of these unwanted gifts were from friends.

Almost Half of Dads Have Been Regifted a Gift They Gave

•   71% thought it was funny

•   28% were hurt, annoyed, or mad

Dads are even more likely than moms to regift: 47% of them have done it — mainly with presents from distant relatives.

Lots of Unwanted Gifts Are Sitting in a Closet Someplace

When they get a Christmas present they don’t want or need, the overwhelming majority of respondents said they hang onto them, rather than exchange them. This was the answer chosen by:

•   80% of grandmothers

•   79% of moms

•   74% of grandfathers

•   70% of dads

So Whose Gifts Do They Take Back?

Of those parents and grandparents who return or exchange gifts:

•   Moms are most likely to return gifts from friends

•   Dads are most likely to return gifts from parents or other relatives

•   Grandmothers are most likely return gifts from distant relatives

•   Grandfathers are most likely to do return gifts from distant relatives or coworkers

Recommended: Tips for Using a Credit Card Responsibly

Plenty of Moms and Dads Are Wishing for a Vacation

If you splurge and get your parents a trip as their holiday gift, expect them to waste no time in packing their bags. Of the moms and dads who chose an experience as the gift they most want for the holidays, a vacation was at the very top of the list.

While paying for a vacation can be expensive, you might want to think about splitting the cost with your siblings or putting it on your credit card to help cover the cost. This is one reason why getting a credit card can be helpful when you’re buying holiday gifts.

Time Together Might Be the Greatest Gift of All

You may not need to get your parents a lot of presents (besides a gift card, that is!). A number of moms and dads who took our survey said they wanted family time over the holidays more than anything. In fact, for moms, spending time with family is their second most-wanted gift.

For dads, family time came in third. Electronics like gaming systems edged it out slightly.

Grandmothers and grandfathers want to spend time with family most of all. Each of them chose it as their second favorite gift option.

The Takeaway

One specific holiday gift will please your parents and your grandparents this year: a gift card. Not only does this make your shopping easier, but it gives your loved ones exactly what they want. A gift card that can be used anywhere, like a Visa gift card, is what the respondents to our survey wanted most.

If you’re looking for other gift options, dads are partial to electronics, like gaming equipment, and both moms and dads would be happy to find airline tickets for a vacation in their stocking.

As you’re doing holiday shopping for your family, you can get a gift for yourself at the same time. With a credit card from SoFi, you can earn generous cash-back rewards on all purchases.

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Photo credit: iStock/seb_ra

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.


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.

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Debt is a slippery slope. You can be doing just fine when an unexpected bill starts a slide. Maybe you use a credit card or three to keep up for a while. But one setback — like major car repairs — throws you off balance again, and eventually debt begins to swallow you up.

But there’s good news. First, you’re not alone. Second, millions of people like you have dug themselves out of debt using the Debt Avalanche Method. This debt reduction strategy focuses your efforts on the debts with the highest interest rates. Keep reading to learn the advantages and disadvantages of this strategy, as well as some proven alternatives for paying off debt.

How the Debt Avalanche Method Works

First, make a budget. Determine exactly how much money you have coming in each month and how much goes out to household bills. Find ways to trim the fat from anything you can — dinners out, streaming services — so you’ll have more cash to pay toward that smothering debt. If you need help, here’s a guide to the 70-20-10 rule of budgeting.

Then make a list of all your debts. Start with the loan or credit card that has the highest interest rate, and work your way down to the one with the lowest interest rate. Don’t pay any attention to which one has the highest balance or the highest minimum payment. The Avalanche Method is all about interest rate.

Continue to make the minimum payments on all your debts, but put anything you can (bonuses, tax refunds, that $20 your grandma stuck in your pocket) toward paying off the high-interest debt at the top of the list.

Now we’ll fast-forward to the glorious moment when the first debt on your list is paid off. Congrats! Cross it off and move to the next debt on your list: This should be the one formerly known as the second-highest-interest-rate debt, now the highest.

Roll whatever payment you were making on the first debt into the second debt, adding it on to the minimum payment. When that debt is paid off, do the same with the third on the list. As you continue paying off outstanding debt, you should have more and more money to put toward the next target balance. Keep going until you’ve plowed through each debt on your list and can declare yourself debt-free.

Advantages of the Debt Avalanche Method

Fans of the Debt Avalanche Method laud its efficiency. The most expensive debt is ditched first, which can be a big money saver. And the amount of time it takes to get out of debt overall is cut too, because less interest accumulates every month.

Remember, the compound interest (interest on interest) that you love in your savings account can crush you when you owe money. Although compounding periods vary from daily to monthly to annually, depending on the type of debt, credit card balances are typically compounded daily.

That means every little purchase you make and carry over months and years is probably costing you way more than you want to think about. And if you miss payments, the interest rate you’re paying will likely increase, costing you even more.

If you need help keeping yourself in line, check out the minimum payment warning on your monthly statement. It informs a cardholder just how long it will take to pay off a balance if only the minimum monthly payment is made, as well as how much will need to be paid each month to pay off that balance within three years. The total dollar amount paid in each scenario is also disclosed.

Downsides to the Debt Avalanche Method

Using the Avalanche Method to pay off debt isn’t necessarily a good fit for everyone. The method is great for disciplined, analytical thinkers who get excited by the knowledge that they’re playing the long game.

However, the Avalanche approach might not provide enough incentive for those who are motivated by feelings as well as logic. If you need the psychological boost from small wins to stick to a plan, it can be a tough ride.

Another downside to the Avalanche is that it assumes paying off debt as quickly as possible is always the right thing to do. But there are other factors to consider, like your credit score.

If you’re contemplating purchasing a home or car in the near future, or taking out some other kind of loan, it may be worth running the numbers and looking at how your paydown plan will affect your credit utilization ratio and improve your ability to qualify for a lower interest rate.

To make the Avalanche Method a success, it helps to be the type of person who is self-disciplined, self-motivated, self-aware, and capable of celebrating self-made milestones.

Which Debts To Include in a Debt Avalanche

It’s important to know which sort of debts should be included in a debt payoff strategy — and which ones you should leave out. When making your list of debts from high to low interest, include the following:

•   Credit cards

•   Personal loans

•   Student loans

•   Car loans

•   Buy Now, Pay Later (BNPL)

•   Medical bills

With Buy Now, Pay Later, borrowers typically pay no interest as long as they make their payments on time for a designated period. So keep making those payments, but don’t worry about putting extra cash toward your balance until that debt rises to the top of the list.

The same with medical bills. Doctors and hospitals generally don’t charge patients interest on outstanding balances. Make your payments as agreed, but reserve extra cash for the higher-interest debt.

Do not include your mortgage. Financial experts consider this “good” debt. One day, you may decide to put extra money toward paying down your mortgage principal, but for now, focus on your other debts.

Debt Avalanche Example

Below is the debt list for a hypothetical individual, Jane, with over $35,000 in debt. Note that these debts are in order of highest to the lowest interest rate. The balances and minimum payments are in no particular order.

Debt	APR	Balance	Minimum payment
Credit card #1	23%	$3,000	$35
Credit card #2	18.99%	$4,000	$40
Credit card #3	15%	$5,000	$50
Car loan	9%	$10,000	$200
Student loan	4.99%	$9,000	$78
Buy Now, Pay Later	0%	$1,000	$166
Medical bills	0%	$3,500	$292

Jane is paying over $800 a month just to keep up with minimum payments. But only making minimum payments won’t get you out of debt anytime soon. Fortunately, Jane found another $500 a month to put toward her first credit card. She’ll save big on interest as she pays down the balance. However, she’ll still need to pay another $800 a month on her other minimum payments.

Alternatives to the Debt Avalanche Method

The Avalanche is for rational thinkers. But when it comes to money — and life in general — humans tend to follow their gut. That’s why some people prefer the Avalanche’s more emotionally available cousin, the Snowball Method.

With the Snowball Method, the steps are much the same, but you start your list with the smallest balance and work your way toward the largest, disregarding the interest rate. The idea is that those first targets can be knocked down quickly, creating a sense of accomplishment that helps keep you on task until it becomes a habit.

But if the Avalanche and Snowball methods leave you cold, maybe you’ll find inspiration in a hot hybrid. This one’s called the Debt Fireball, an original SoFi strategy created to help people torch their expensive “bad” debt and move on to the things that matter to them faster.

The Fireball blends the best parts of the Avalanche (the cost savings and faster timeline) and the Snowball (the motivation and feeling of achievement). And it adds some flexibility for those who wish to prioritize saving and investing.

How the Debt Fireball Works

After making a budget and determining how much money is left over each month after paying for necessities, prepare to tackle your debts. Start by categorizing all your debt as either “good” or “bad.”

Like the Avalanche, this method is all about the interest rates. Debts with an interest rate of less than 7% are “good.” Debts with an interest rate higher than 7% are “bad.” For example, a student loan with a 3% interest rate would be good, while a credit card with a 21% interest rate would be bad.

Take the list of bad debts and put them in order based on their outstanding balances, from smallest to largest. Keep making the minimum monthly payment on all outstanding debts, but funnel any excess funds toward the smallest of the bad debts. For that one, pay the minimum plus whatever extra amount you can.

When that balance is paid in full, move on to the next smallest bill on the bad-debt list. Keep burning through those balances until all your bad debt is repaid. After that, keep paying off your good debt on the normal schedule while you also invest in your future. You can look at putting your money toward a financial goal, such as saving for a house, starting a business, going back to school, or retirement.

The Fireball is a debt management plan that’s built for real people. It appeals to a person’s practical side because it prioritizes high-interest debt. It organizes a payoff plan in a logical way and focuses on paying off one debt at a time. But it also can provide the psychological strokes some of us need to stay interested and dedicated to becoming debt-free. It turns the trek out of debt into a series of short hikes.

Recommended: When to Start Saving for Retirement

The Takeaway

Using the Debt Avalanche Method is a great way to pay off debt for disciplined, logical personalities who want to maximize their savings on interest. The Avalanche works by paying down the highest-interest debt first, regardless of balance, while making minimum payments only on other debts. It’s not for everyone, though, especially if your highest-interest debt is also your biggest balance. For folks who want to celebrate short-term wins to keep them going, the Snowball Method is a popular option. Instead of focusing on interest rate, borrowers prioritize the lowest balance first. The key to any debt payoff strategy is to know yourself and choose the method that feels right for you.

Another option for paying down debt is a personal loan. SoFi offers personal loans with low rates and no fees required. Whether you need to consolidate your credit cards or other high-interest debt, consider an unsecured personal loan to simplify your finances.

Learn more about SoFi personal loans.

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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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

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If the kitchen is the heart of the home, what does it say when yours is falling apart? Shabby fixtures, failing appliances, or a dysfunctional layout might have you daydreaming about a full gut reno — but how much does an average kitchen remodel cost? A minor kitchen update by DIY-savvy homeowners may come in at $4,000, while a major remodel can balloon to $50,000, or even $100,000+.

Before you begin your kitchen update, it helps to consider why you’re remodeling and whether it will add value to your home. We’ll help you scope out the average cost of a kitchen remodel — including cabinetry, countertops, appliances, and labor — and where you can save money without sacrificing function or design.

Kitchen Remodel Cost Overview

Homeowners remodel for different reasons: better functionality, entertaining, to update dated fixtures, or to prep for a home sale. It’s important to consider both what you want to get out of the remodel and what your return on investment (ROI) might be before diving into hiring contractors and purchasing appliances.

Do you plan to live in your place a few more years and enjoy your new kitchen? Or will you strategically upgrade for a home sale in the near future? The answer will influence where and how you spend money.

The truth is you probably won’t recoup the total cost of a kitchen remodel in a home sale.
According to Remodeling Magazine’s Cost vs. Value Report 2022, the national average ROI for a minor remodel with mid-range materials is 71%. A major remodel with upscale materials, on the other hand, yields just a 52.5% ROI.

Clearly, the best bang for your buck will be less costly but visually impactful minor updates: replacing cabinets fronts, countertops, faucets, and lights, plus painting and perhaps new flooring. But if you want to change the layout or add all-new appliances, you’re looking at five figures. (You may be interested in this story on the difference between a renovation vs. remodel.)

Average Kitchen Remodeling Costs by Feature

The average kitchen remodel cost can vary a lot depending on a few key items: cabinetry, countertops, and appliances. We’ll review your options and typical costs for low-, middle-, and high-end updates.

Kitchen Cabinetry Cost

Cabinetry typically eats up 25% of a kitchen budget. There are three types of kitchen cabinet construction, each priced per linear foot:

•   Stock cabinets, the least expensive, run $60-$200 per linear foot, or $1,250-$2,500.

•   Semi-custom are $100-$650 per linear foot, or $1,875-$10,000.

•   Custom will set you back $500-$1,200 per linear foot, or $7,500-$18,750.

Custom cabinets are made to order, based on your kitchen’s precise measurements, and made of solid wood. Stock are ready-made and mostly constructed of engineered wood, and semi-custom are a hybrid of stock and custom.

Countertop Cost

The cost of countertops is determined by the material. Typical materials include granite, marble, quartz, stainless steel, and butcher block wood. Granite, stainless steel, and butcher block are good budget options, ranging from $850 to $4,000 depending on the size of your kitchen. Marble and quartz command $2,000-$10,000.

Appliances Cost

The number of different appliances in the typical kitchen sets this home reno apart from, say, a bathroom remodel. Appliances generally account for 20% of your overall budget. Replacing all your appliances at once — fridge, stove, oven, dishwasher — can be quite pricey.

Discount shoppers might be able to find a full suite of lower end appliances for as little as $1,500. Midrange appliances can run about $5,500 all in, and higher end models can come to $17,000. Double wall ovens, a favorite of serious cooks, can cost $1,800-$6,500 on their own. And some homeowners may decide to annex a closet for a mini laundry room.

Installation and Labor Costs

Labor is another major cost that can be hard to predict. But count on spending 30%-35% of your budget on contractors and installers. Your price will depend on where you live, how large your space is, and the features being installed. Read more about these factors below.

Where You Live Matters

Bargain hunters should be aware that some factors influencing budget are not within their control — like where in the U.S. you live. Homeowners on the West coast and in the Northeast generally pay more for materials and labor than in the South. Prices also run higher in and around major cities.

Midrange vs Upscale Models

It may shock you to learn that upscale materials and appliances can cost you twice as much as midrange models. If a major midrange kitchen remodel comes to $50,000, a high-end remodel of the same kitchen might be $100,000.

Many homeowners pick and choose a combination of inexpensive, midrange, and higher end options.

Personal Budgeting for Your Remodel

HGTV recommends spending between 6% and 10% of the value of your home to get the best ROI. A major reno for a $400,000 home, then, would cost between $24,000 and $40,000. If your kitchen budget goes considerably higher, you risk making the rest of the house look mediocre by comparison. Aim too low, and your kitchen might not live up to the quality of similar homes in your neighborhood. Either way, your new kitchen may raise a red flag with home buyers.

It can be tempting to throw all your kitchen purchases on a credit card, but keep in mind that high-interest rates can inflate your renovation costs. These days, many homeowners are turning to a flexible personal loan to fund home renovations and remodels.

With this type of loan, you receive a lump sum payment to cover your kitchen remodel cost. You can pay back the loan over a term of your choosing in equal monthly installments. The interest rate is determined by your credit history and credit score, but is typically lower than credit card interest. Our Home Improvement Cost Calculator can give you an idea of how much you’ll need to borrow.

What Costs the Most?

What costs the most depends in part on the design decisions you make. Semi-custom cabinets will take up a larger part of your budget than stock will. Higher end brands, as we noted above, can double your appliance costs compared to mid-range. And with large kitchens or complex remodels, labor and installation can make up a third of your overall budget.

How To Save Money

In a full-scale kitchen remodel, new kitchen cabinets are typically the biggest expense, accounting for 20%-40% percent of the project budget. If your cabinets are in good shape and fulfill your storage needs, refacing them can slash your bill. Refacing can mean either stripping and repainting or staining existing doors, adding stick-on veneers, or replacing the doors while preserving the cabinet shelves. Add new hardware for a more modern look.

The next biggest line item in your kitchen remodel budget might be labor for installation. When you’re starting the home remodel process, find a contractor you can trust. That means doing your research, speaking with and getting quotes from multiple contractors, and reaching out to their previous clients for referrals. When entertaining bids, remember that an experienced, in-demand contractor will likely charge more than less capable competitors, but will almost certainly be worth it.

Finally, you may be able to trim some installation costs by doing simple things yourself: picking up items instead of paying for delivery, painting walls instead of paying contractors for the labor, or replacing your backsplash. Learn more DIY tricks in our guide on how to remodel a kitchen.

For more ideas, check out this roundup of ways to fight inflation’s effect on your kitchen remodel.

Cushion Your Budget

For any home remodeling project, financial experts and DIYers both recommend padding your budget by 20%. That means assuming you’ll spend 20% more than your projected total for materials and labor. Not only does that cover all the little things that can add up, it also accommodates pricier issues that may be uncovered, like necessary electrical or plumbing updates.

Stick to Your Budget

Experts recommend that homeowners fully commit to a plan and budget before undertaking a major remodel. Too many last-minute changes won’t endear you to your contractors and can inflate your costs as one small change can lead to other unforeseen adjustments.

House Exterior Style Quiz

The Takeaway

The average kitchen remodel cost can vary widely from $4,000 to $50,000 or more, or between 6% and 10% of your home’s value. Your cost will depend on a number of factors such as kitchen size and whether you choose bargain, midrange, or high end materials and appliances. The major kitchen remodel cost drivers are cabinets, countertops, appliances, and labor. The good news is that the ROI for a smart, mid-range remodel is 71%.

Home improvement loans from SoFi have low-interest rates available for those who qualify and offer fixed monthly payments. These 100% no-fee unsecured loans might be just the recipe to getting your perfect kitchen.

Find out more about using a SoFi personal loan to update your kitchen.

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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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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