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Q: How much should I keep in my travel fund?

Figure out how much you’ll need for the trip you are saving for, and then contribute regularly to get to that number. The amount you’re saving for will vary tremendously depending on whether you are planning a long weekend in the mountains with pals or spending a week (or more) on the other side of the planet.

Q: How can I save money on a travel fund?

First, to save money on a travel fund, look for a savings account that doesn’t charge monthly fees. Then, scan for an account that offers a competitive interest rate. These two factors will help boost your savings and get you on your dream vacation as quickly as possible.

Mar

2024

Where To Keep Your Travel Fund

By Janet Siroto | Budgeting & Goals, money | No Comments

Are you a little obsessed with planning your next big trip? We hear you! The excitement of seeing new places — whether that means a faraway tropical island or a neighboring state — is a powerful lure. But there’s one thing that may get in the way: Money.

Let’s be real, travel can be expensive. Even if you’re hopping in the car for a short weekend road trip, the cost of gas, food, entertainment, accommodations, and more can get a bit overwhelming. Fortunately, with a little bit of planning, you can make your travel dreams a reality. And it can all begin by creating a travel fund.

What Is a Travel Fund?

A travel fund is exactly what it sounds like — a fund exclusively used for gallivanting around the world. It’s a place to stash some cash that you don’t use for rent, bills, repaying student loans, or any other monthly financial obligations. This fund is just for your passion in life. And your passion is clearly traveling.

How to Fund Traveling

Unfortunately, a travel savings account will not grow by magic. If only! You’ll need to find ways to funnel some cash towards your travel plans. There are a variety of ways to do this. Perhaps you got a raise recently (nice!) and can put that amount directly towards travel. Or, maybe you can automatically whisk $25 or $50 per paycheck into your savings. Or, you might give up concert tickets or takeout food for a while to allow some wiggle room in your budget that goes towards paying for your next getaway. There are many options — some of which we’ll explore below.

Recommended: 15 Easy Ways to Save Money

Setting Up a Dedicated Travel Savings Account

There are a few options for where to keep your travel fund. Yes, you could keep your vacation fund in the same account as your day-to-day savings, but separating the fund could provide even more clarity.

Keeping your travel fund in a separate account can make it easy to see how close you are to reaching your travel goal. It allows you to see exactly how much money you’ve saved for the cause with ease. Having the money in a separate account also allows you to set up automatic contributions, just as you might already be doing with your other accounts.

Automating your savings towards travel means you can eliminate another task from your to-do list. You’ll be making progress toward your dream of cruising down the Nile without even having to think about it. And since it’s stashed separately, you don’t need to worry that you’ll use it on, say, entertainment or new shoes without realizing it.

Tips on Selecting an Account to Use

When it comes to setting up a dedicated travel fund, the first order of business is usually to pick an account type. There are a variety of options to choose from. Part of what will likely influence your decision is how long you plan on saving. If you want to take a trip in just a few months, a savings account may be a good vehicle. You can easily contribute to it, and you’ll earn some interest.

To help your travel fund grow faster, you may want to go with a high yield savings account. These accounts typically pay a much higher annual percentage yield (APY) than traditional savings accounts, giving you the ability to earn more on your money while still enjoying the security of a federally insured account. These days, many high-yield savings accounts offer APYs of up to 5% or more — many times more than the average national rate of 0.46%.

Some of these accounts may come with certain restrictions, like a limited number of withdrawals a month or maintaining a minimum balance, so be sure to read the fine print on each account you might be considering.

Another is a certificate of deposit (CD), which locks up your money for a particular term, typically from six months to a few years. This type of account can sometimes offer a more competitive interest rate than a traditional savings account but comes with withdrawal restrictions. If you choose to withdraw the money before the term ends, you’ll likely have to pay a penalty or fee.

Yet another option is to use a cash management account with a brokerage firm. These accounts are meant as an option for your uninvested money. They can also be great for putting away some extra money to save, but again — do read the fine print. Fees may be involved, plus commissions if a broker steps in to help you with your investments. Make sure that these won’t cut into your savings.

All of these options will allow you to keep your vacation fund separate from your checking account, emergency savings, or regular savings account. You may even be able to give it a unique name like “travel fund” or even more specific like “Tahiti fund.” It’s much more exciting to watch “dream trip to Bali fund” grow than just “account: 3283052.”

Growing Your Travel Fund

After you’ve created your unique travel fund, it’s time to put in some savings work. And that begins with your budget. If you already have a budget, that’s great. All you need to do is add in “travel fund” as a new line item and shift as much money as you feel comfortable moving to this new account each month.

But, if you’re starting from scratch, that’s OK too. Trying to save for the trip of a lifetime is just as good an excuse as any to start budgeting.

To build a budget, you’ll want to start by figuring out your average monthly take-home income (what you earn after taxes are taken out). Next, it’s good to create a list of all your monthly expenses. You’ll want to include all the basics like rent or mortgage, car payments, student loans, credit card statements, food, gas, insurance, gym memberships, streaming accounts, and any money you currently put towards saving and investing. Make sure to get as granular as possible about your spending.

Next, subtract your average monthly expenses from your average monthly income to see how much you have leftover. If it’s more than $0, that’s excellent news! You can put the excess towards your travel fund. If not, you’ll need to find some places to cut back on spending.

Recommended: How to Make a Budget in 5 Steps

Finding Extra Cash for Your Travel Account

If you’d like that leftover number in your budget to be higher, maybe it’s time to take a look at both your spending and your current income level. Perhaps you can see where changes can be made.

One of the potentially easiest ways to create more cash for your travel fund is to look deeply at your monthly spending. Are you still subscribing to that streaming service you never (or rarely) watch? Are you signed up for the premium version of that social media platform you haven’t been on in months?

What about that gym membership? How’s that going for you? Go ahead and get rid of things that aren’t bringing you joy or are dispensable. Then, refocus those funds in your travel fund.

If there’s no room for cuts, then it might be time to increase your income. Of course, you could always ask for a raise at work, but if that doesn’t come through, explore some other options — like a side hustle. A side hustle is a gig you take on outside your normal work to make some extra money. If you can, pick something you really enjoy doing so it feels less like “work.” For example, if you love dogs but aren’t ready to own one, maybe walking dogs before work would be fun for you.

If you are a handy person who likes to fix things, creating a listing on a site like Thumbtack or TaskRabbit may be a good idea. If you have other talents like photography, writing, or graphic design, you might do some networking to see if you can drum up some freelance work. That way, you can get paid for what you love to do and save for what you love too.

SoFi: Your Partner in Creating a Travel Fund

By now, you’ve committed to adjusting your budget and setting aside cash in a new fund. The only thing left to do is find the best place to stash your cash.

When choosing where to put your travel fund, you’ll want to find an account that pays a competitive yield, keeps your money safe, and allows you to easily access your funds when it’s time to set off for your next adventure.

SoFi Travel has teamed up with Expedia to bring even more to your one-stop finance app, helping you book reservations — for flights, hotels, car rentals, and more — all in one place. SoFi Members also have exclusive access to premium savings, with 10% or more off on select hotels. Plus, earn unlimited 3%** cash back rewards when you book with your SoFi Unlimited 2% Credit Card through SoFi Travel.

Wherever you’re going, get there with SoFi Travel.

FAQ

How much should I keep in my travel fund?

To come up with a travel savings goal, you’ll want to determine how much you’ll need for your trip and when you want to take it. From there, you can determine how much you’ll need to transfer into your travel fund each month to reach your goal. For example, if your trip will cost $2,500 and you plan to travel in six months, you’ll need to set aside around $33 a month.

How do I set up a travel fund?

Setting up a travel fund can take only a matter of minutes. It can be as easy as opening a savings account online and then directing money towards it. You can also go into a brick-and-mortar bank to set up an account.

How can I save money on a travel fund?

To save money on a travel fund, look for a savings account that doesn’t charge monthly fees and offers a competitive interest rate. These two factors will help boost your savings and get you on your dream vacation as quickly as possible.

**Terms, and conditions apply: This SoFi member benefit is provided by Expedia, not by SoFi or its affiliates. SoFi may be compensated by the benefit provider. Offers are subject to change and may have restrictions, please review the benefit provider's terms: Travel Services Terms & Conditions.
The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.

When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.

Eligibility: You must be a SoFi registered user.
You must agree to SoFi’s privacy consent agreement.
You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia's website or app, or any other site operated or powered by Expedia is not eligible.
You must pay using your SoFi Credit Card.

SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.

Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities.
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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.

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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Mar

2024

How to Save on Spring Break Travel

By Kaitlyn Farley | Budgeting & Goals, Financial Independence, money | Comments Off

Your mind and body may be ready for a sunny beachside spring break in Cancun, but if you’re living that broke college kid life, you may imagine your spring break looking more like a week at home, scrolling through Instagram and binging Netflix.

However, it is possible to plan a spring break trip on a limited budget. And yes, even a college student’s budget can be stretched for spring break fun! If you’re wondering how to plan a spring break trip without living off instant noodles for the next month, we have some tips to help you get a well-deserved vacation from those long nights spent studying in your dorm room.

Keep reading for some of our best tips on making your spring break trip dreams happen on a budget.

1. Start Planning Early

Waiting until the last minute to plan a trip could mean missing out on cheaper flights, hotels, and even popular ticketed attractions. If you’re going to a hot destination during a peak travel season, which includes spring break for many destinations, then you could blow your travel budget on the flight alone, leaving you without enough money for food and lodging.

2. Make a Budget & Stick to It

Before you even leave for your destination, it’s smart to create a travel budget. What can you reasonably afford to spend on accommodations, transportation, entertainment, meals, and shopping? Having a budget could help you avoid splurging on expensive dinners or overspending at local shops.

3. Find Off-Season Destinations

If Cancun for spring break is too pricey for your college student budget, don’t stress. There are a number of great destinations that are off-season in the spring, ranging from the more rugged Jackson County, North Carolina to the Big Apple.

4. Only Travel as Far as You Can Drive

It’s about the journey, not the destination, right? You can make that (semi) true by taking a road trip with a few friends. On a road trip, you don’t need to follow any set schedule. Since there’s no flight or train to catch, and often no hurry to reach a destination, you can make spontaneous decisions and discover hidden gems along the way.

5. Avoid Tourist Traps

Doing spring break on a budget generally means skipping touristy destinations like Miami, New Orleans, and Cabo. However, there are plenty of cheaper alternatives to these locations that can save you money and that will probably be far less crowded, too.

6. Reach out to Friends & Family

If you have friends or family in another city, reach out and ask if they’d be willing to host you. If they agree, you could get some free lodging and meals out of it. Plus, you’d be connecting with locals who could guide you through the city and give some tips on cool and free stuff to do that you might not have found otherwise.

7. Ditch the Plane Ticket

Planes and cars aren’t the only way to land at your tourist destination. You can do spring break on a budget by hopping on an Amtrak train or a Greyhound bus, both of which have destinations all over the country. The best part? You can catch up on some work, sleep, or relaxation while you enjoy the ride.

8. Don’t Forget about Cruises

You could spend a fortune going to just Miami or Los Angeles. Or, you could check out some cheaper cruise options that could potentially take you all over Alaska, the Caribbean islands, or a slew of other destinations for less. There are even cruise options designed specifically for college students.

9. Consider Pitching a Tent

Do you get motion sickness in cars or boats? With camping, your feet will be firmly planted on the ground, and your budget will also likely stay down to earth. You can camp out in many destinations across the U.S. and even abroad, be it under the stars near a national park or near a great fishing hole in the Carolinas.

10. Look For a Deal

Sites like Groupon and LivingSocial offer a number of travel and hotel deals both for individuals and for group travel. Checking out which hotels are offering promotions could help you save when booking accommodations. You can also find deals on attractions near where you’re vacationing, too.

11. Sign Up for a Spring Break Volunteer Experience

Many colleges offer a program called “alternative break,” which allows students to travel and volunteer during their spring break. If your college doesn’t offer any alternative break trips, you can still find some opportunities through organizations like Habitat for Humanity and United Way.

12. Be a Tourist in Your Own State

If airfare is out of the question for your spring break budget, a budget-friendly alternative could be touring your own state. You can take a spring break road trip around your state or even take multiple day trips, the latter of which could allow you to have most of your meals at home with no hotel needed.

13. Fly on Unpopular Days

No, it’s not just your imagination: There are some days that are cheaper to fly on than others. If you’re not tied to a set departure and/or return date, use the flexible date search on a travel or airline site. This can help you find the cheapest travel dates for your trip.

14. Sign Up for Price Alerts

One helpful way to ensure you’re getting the best possible deal on your trip is to sign up for price alerts, a free service offered by several travel companies, such as Kayak, Skyscanner, and Google Flights. These sites track prices daily and alert you in real-time when the price changes for a flight, hotel, or rental car you want.

15. Ask for Extra Snacks

If you’re flying to your destination, be sure to grab the airplane snacks. And if you like the snacks, ask for seconds! You may be able to snag a free snack to help tide you over between meals when you land. The worst thing that can happen is that they say no.

16. Consider Airbnbs or Hostels

For those looking for the best tips on how to plan a spring break trip, one not-so-obvious one may be skipping hotels altogether. Staying at an Airbnb or hostel could be a cheaper travel hack than even a budget motel, especially if you don’t plan on spending much time in your room anyway.

17. Use Public Transportation

While Uber may be one of the handiest apps to have while traveling, relying on ridesharing and taxis could end up costing you a small fortune, especially if you’re traveling in a big city. Using public transportation could cost you a fraction of the price of an Uber, plus it will allow you to explore more of your destination as you navigate around subway and bus stations.

18. Bring Your Own Food

Grocery costs may be on the rise, but the cost of dining out can really wreak havoc on your spring break budget. If you want to try the local cuisine, you can typically do so much cheaper by going to a local grocery store and buying premade meals there or, better yet, making your own meals using fresh, local ingredients. This option may only be available if you’re staying at an Airbnb or hotel with a kitchenette, though.

19. Eat Out for Lunch, not Dinner

Eating out for dinner will often cost you far more than eating out for breakfast or lunch. And if you decide to eat out for dinner still, skip the drinks and desserts. These items typically have higher markups than other items on the menu. Plus, when it comes to desserts, the quality (and quantity!) may not be worth it — many restaurants don’t even make the desserts they serve.

20. Ask About Complimentary Hotel Meals

Students looking for spring break trips on a budget won’t want to miss out on this tried-and-true travel budget saver: Before booking your hotel, ask if they have any complimentary meals, such as a continental breakfast. It may not be as fancy or Instagram-worthy as the hottest brunch spot in town, but it will likely be a lot better for your budget.

21. Use The Free Hotel Coffee

Most hotels offer free coffee either in the lobby in the mornings or through small coffee makers in your room. It may not be as fancy as your usual Venti Coconutmilk Latte with two pumps of salted caramel, but it won’t cost you anything.

22. Look out for Free Samples

Looking to score some more free snacks? Add local farmers’ markets to your itinerary. Many markets are full of free samples, so you may even be able to scrounge together a free lunch. You may also be able to score free swag, like t-shirts and reusable bags, from local vendors and businesses, your hotel, or the local visitor’s center.

23. Prioritize Free Activities

Sure, you can spend $50 for a museum ticket. Or, you could search online for some free museums nearby. Many hot spring break destinations offer free walking tours, free museum days, and a plethora of other free activities, such as parks and beaches.

24. Find a Travel Buddy (or Four!)

You’ll find that going on a budget-friendly spring break trip can be a lot easier if you team up with friends. Pooling your college budgets together may even help you to afford nicer accommodations or a more far-flung destination.

25. Cash in Credit Card Rewards…

If you have a rewards or cashback credit card, you may want to save up your points to help fund your epic spring break. Having a travel rewards card can be an easy way to save on travel, especially if you’re able to use that card on purchases before heading out on vacation, which could help you build up even more rewards points.

26. …And Earn More Rewards While Traveling!

Using your rewards credit card on vacation may not help you save for your current trip. But if you rack up more rewards during your trip, you’ll already have a new vacation fund started before you even come back from spring break.

27. Research Student Discounts

Catching a movie or eating out during spring break? Ask about a student discount! You may be able to score some sweet savings even before your vacation, as companies like Expedia often offer student-only travel deals. You can also try StudentUniverse , which helps students get discounts on hotels, airfare, and more.

28. Ask About Membership Discounts

A ton of college discounts exist, but don’t rule out membership discounts you could get from family members. For instance, Costco, Sam’s Club, AAA, and AARP all offer travel discounts to their members. It may be worth asking some relatives about their memberships to save big on your spring break trip.

29. Avoid Transaction Fees

Transaction fees can be a real budget-killer if you’re traveling abroad. And even if you’re stateside, ATM fees can also put a dent in your spring break savings. So you may want to ask your card issuer about fees and plan accordingly to make sure you have enough cash on hand to avoid them.

30. Use Hotel Toiletries

TSA-approved toiletries can be overpriced, and buying them when you arrive at your destination may also mean overpaying for toiletries that you have loads of at home. The best alternative? Decant your own shampoo and conditioner into smaller bottles you can snag at The Dollar Store. Or, better yet, just use the hotel toiletries. They may not be what you’re used to, but your budget will thank you.

The Takeaway

Wondering how to plan a spring break trip on a budget? It may not be as hard as you think. If you’re willing to try off-peak destinations and hunt for discounts, you can save a ton of cash. Spring break trips on a budget don’t have to be a drag, either. You can still go to popular destinations if you create (and stick to) a spring break travel budget. Using rewards and cashback cards can also help you save on airfare and other travel expenses.

Wherever you’re going, get there with SoFi Travel.

Photo credit: iStock/onurdongel

SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.

Mar

2024

Can I Use a Loan to Pay for a Funeral?

By Jamie Cattanach | Family Finances, Money & Life, personal_loan | Comments Off

Life is expensive. And unfortunately, with a wide array of funeral-related costs, so is death. So much so, in fact, that some people turn to funeral loans to pay for it.

While you may be able to use a loan to pay for the casket, headstone, flowers, and other expenses, there are other ways to make this challenging part of life more affordable.

Read on to learn more about funeral loans and alternatives worth considering.

What Are Funeral Loans?

Funeral loans are basically personal loans marketed towards people who are facing funeral costs. That is to say, they’re a form of unsecured debt. This means they may be harder to qualify for — and come with higher interest rates — than debt that carries collateral, like a mortgage or an auto loan.

Although it may be marketed as a funeral loan, chances are you’re just getting a personal loan, which means you will probably be able to use the funds for just about anything you want. That said, it’s always worth checking with the bank or lender to ensure there aren’t any stipulations as to how the money gets spent.

How Does a Funeral Loan Work?

A funeral loan works much like other types of unsecured debt: You simply apply for the loan amount you need and, if you qualify, the lender will deposit the amount in your bank account (or cut you a check).

You then pay back the balance, plus interest, over the course of a set term, or loan lifespan, usually somewhere between two and 12 years.

You’ll pay the loan in monthly installments, like most other bills. Depending on your lender’s policies, you may be able to pay off the loan in full earlier. But always check to ensure you won’t get penalized for doing so.

Average Funeral Cost

So why are people going into debt just to send off their dearly departed? Funerals are expensive, that’s why.

According to data from the National Funeral Directors Association (NFDA), the median cost of a funeral burial in 2021, the last data available, was $7,848 — and only about $1,000 less for funerals with cremations.

Caskets alone can cost thousands of dollars. What’s more, most funeral homes still require them to be placed in a concrete burial vault to make landscaping easier — to the tune of another $1,500 or so.

That might explain why people are becoming more interested in green, or natural, burials, which can cost significantly less. Depending on the specific services and location, the total bill could be as little as $500.

Still, it makes sense that some bereaved people end up turning to funeral loans to get through this time, which is tough both emotionally and financially.

Pros and Cons of Funeral Loans

Like any other financial product or decision, funeral loans have both drawbacks and benefits to consider. Let’s take a quick look with a chart, and then dive deeper into the specifics.

Pros of Funeral Loans	Cons of Funeral Loans
Convenience — you can get the money fast so you can worry about everything else	Interest can add up substantially over time, and rates can be high for unsecured loans
May make it easier to afford higher-quality funeral services or enact a loved one’s last wishes	Taking out a loan may impact your credit score or credit history
Depending on your creditworthiness, a funeral loan may carry a lower interest rate than credit cards	You’ll be committed to repaying the loan for a relatively long period of time — likely at least a year or two, and up to 10 — which means less money available monthly to make ends meet.

Pros of Using a Loan to Pay for a Funeral

Here’s a closer look at some of the benefits of using a funeral loan.

Convenience and Payment Time Frame

When you apply for a funeral loan, there’s a good chance you’ll have the money in your hands quickly. In some cases, you could get the money on the same day, though the vast majority of lenders will have the funds to you within five business days or so.

Afford Quality Funeral Services

As discussed, funerals are expensive, and for some families, skimping on a casket or service simply isn’t an option. If funds are tight, a funeral loan may be able to help you pay for a more robust celebration of a loved one’s life.

May Be Better Than Credit

Although personal loans tend not to have the cheapest interest rates, they often have lower interest rates than credit cards do. If you’ll need time to pay off the debt, a funeral loan may be a better option than a credit card from a financial perspective.

Cons of a Funeral Loan

As discussed, there are drawbacks to funeral loans, too. Here are some of those to keep in mind.

Interest Rate

Borrowing money isn’t free, and since funeral loans are a form of unsecured debt, they tend to have higher interest rates than, say, a mortgage.

When considering a funeral loan, ask the company to provide documentation that shows how much you’ll pay in total, including interest and fees, over the entire lifetime of the loan. Even at a relatively low interest rate, it can add up faster than you think.

For example, if you took out a $10,000 funeral loan at a 10% interest rate, with a five-year term, you’d end up paying more than $2,700 in interest. That much might pay for the entire cost of the casket today.

Potential Impact on Credit Score

LIke any other type of loan or line of credit, taking out a funeral loan will show up on your credit report. Depending on your other factors, it may decrease your score. (That said, in some cases, it might also help, since having a mix of different credit types is considered a benefit.)

Financial Commitment

A funeral loan is a financial commitment that you’ll likely be repaying over a long period of time — between two and up to 10 years or even more in some cases. As important as properly memorializing passed loved ones is, it’s also critical to ensure that paying off a funeral loan won’t substantially impact your financial life in the long run.

Who Is Eligible for an Emergency Loan for a Funeral?

While anyone can apply for a funeral loan, your credit history will determine whether or not you’re eligible. Again, since unsecured debt is riskier for banks, they may carry higher minimum credit scores for funeral loans than other types of products.

However, depending on the lender you choose and the rest of your credit profile, you may be able to qualify with a score as low as 620.

Can You Get Funeral Loans With Bad Credit?

Again, a bad credit score can make it more challenging to qualify for a funeral loan, but you may still be eligible depending on the rest of your financial profile.

How Much Can You Borrow for a Funeral Loan?

Many personal loan companies offer large amounts of up to $50,000 or $100,000. But it’s usually a good idea not to borrow more than you actually need to pay for funeral expenses. After all, whatever money you borrow will need to be repaid, along with interest.

Alternatives to Help Pay for Funeral Costs

While a funeral loan is one option for funding funeral costs, there are alternatives that may be less expensive and more accessible for you and your loved ones. Here are a few to consider:

• Ask for what you need. If you speak to the funeral director at the funeral home you’re working with, you may be able to work out a payment plan or use multiple different types of payment—such as cash, checks, and credit cards—in order to avoid taking out a funeral loan.

• Use the loved one’s life insurance. If the person who’s passed away has life insurance, the death benefit might be used to help pay for their funeral costs.

• Consider different types of services. As discussed above, a green or natural burial is often less costly than traditional burials. Cremation can also be more affordable than traditional burial.

• Consider using a home equity loan. Borrowing against the value of your home still entails going into debt. However, because it’s a secured loan (your home is used as collateral), you may score a lower interest rate than you would on a funeral loan.

💡 Quick Tip: In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.

The Takeaway

Funeral loans are essentially personal loans used to pay for funeral costs. While they are one way to pay for the goods and services associated with death, other alternatives, like setting up a payment plan with the funeral director, may be more beneficial for the living in the long run.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

How can I get money for an unexpected funeral?

While using a funeral loan is one way to access funds for an unexpected funeral, there are other options to consider. Examples include the deceased’s life insurance, prepaid funeral plans, funeral assistance programs, and even crowdfunding.

How much is a home equity loan for a funeral?

A home equity loan allows you to borrow against the value of your home that you already own — that is, its equity — to pay for expenses, including funeral expenses, in cash. However, this type of arrangement will only work if you own substantial equity in your home, and it does come with its own costs from the lender.

What credit card will pay for a funeral?

While you could technically use just about any credit card to pay for a funeral, if you’re looking to avoid paying interest, it might be a smart move to take out a new card with a promotional 0% interest period. That way, you’d have that time period — likely a year — to pay back the funeral expenses without being subject to high interest. Beware, though: When the promotional period runs out, you’ll still be on the hook for interest if any of the balance is left over.

Photo credit: iStock/shapecharge

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Mar

2024

Pet Financing: Can I Get a Loan to Pay for Pet Expenses?

By Jamie Cattanach | Money & Life, personal_loan | Comments Off

The joy our furry and feathered friends add to our lives is priceless. But pet ownership does come at a dollars-and-cents cost. From basics like adoption fees and food to expensive emergency veterinary care, being a pet parent can be, well, ruff on your bank account.

Pet loans are one way to pay for the expenses of having a pet, but it’s usually a good idea to consider alternatives before going into debt.

Read on to learn about how pet loans may be able to help you meet the financial demands of pet ownership and what other options are available.

What Is Pet Financing?

Pet financing refers, essentially, to taking out a personal loan to pay for the cost of owning a pet. While some banks may market the loans specifically as pet loans, they work the same way.

A personal loan is unsecured debt, which means the bank doesn’t have any collateral to turn to in the event the loan is not repaid. This means that personal loans, including pet loans, may have stricter eligibility requirements and higher interest rates.

💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Cost of Owning a Pet

While the specifics will depend on what kind of pet you own — a fish costs a lot less to feed and care for than a Great Dane — all types of pet ownership come with some costs involved. Here are some of the common expenses you may encounter:

• Purchase or adoption fees, which can vary significantly. Buying a purebred puppy could cost thousands of dollars, while an adoption fee might be a nominal $25 for a cat at the shelter.

• Regular veterinary check-ups and vaccines, which pets need in order to be safe (and, in the case of the rabies vaccines in some U.S. states, legal to keep)

• Food, which can run the gamut from cheap kibble to expensive raw or fresh foods

• Supplies you need to keep your pet safe and happy, like food and water dishes, beds, crates, litter boxes and litter, collars and leashes, or treats.

• Veterinary care or medical procedures that may cost far more than regular upkeep, like dental work or surgery to repair a broken bone

What Can I Use a Pet Loan For?

Because a pet loan is basically just a personal loan, you can use the money for pretty much anything you want. (If the bank you’re borrowing from is offering a pet loan specifically, you can check and ensure that there are no rules or restrictions around what the money can be used for.)

Here are some of the most common ways you might use the funds from a pet loan.

Pet Purchase Financing

If you’re purchasing a pricy purebred, or if the setup phase of pet ownership comes at a steep cost (i.e., if you’re getting into saltwater fish tanks), you might want to use the money from your pet loan to fund the purchase or adoption of your pet.

Pet ownership tends to be more expensive in the first year or so than in subsequent years, since new pets may often need to be spayed or neutered or have their first rounds of puppy or kitten shots. Using a pet loan to get into pet ownership may make sense if you know you’ll have the money to pay back the loan and afford continued care throughout the pet’s life.

Pet Health Care Financing

Just as with humans, health-care related costs for pets can be high. The average cost of routine vet care can be as much as $350 on average during the first year of pet ownership, and $250 per year after that.

That may not sound like much. But alongside other major expenses, like food — which can run as high as $500 or more per year on its own — vet bills can really add up, and may be a reason some owners choose to take out a pet loan.

Pet Surgery Financing

We all hope our four-legged friends never need major medical care, but when they do, it can be just as worrisome for our wallets as our hearts. For instance, even a routine surgery like a spay can cost up to $600 at a private veterinary practice. And if your dog needs a dental cleaning — which is done under anesthesia— the cost may jump tp $1,500 or higher

So using a pet loan to pay for a pet’s surgery can make a lot of sense, though there are still other alternatives to consider (which we’ll get into below).

Pet Care Financing

As anyone who has a dog or cat who can’t or won’t travel knows, pet care can be expensive, particularly if you’re paying for overnight pet-sitting for several days in a row.

Whether you’re boarding your kitty or pup or enlisting the help of a professional pet watcher, you might spend around $50 per night or more. This adds up quickly when you factor in other costs of travel. That’s why pet care might be another reason to take out a pet loan.

Pet Store Financing

For pet owners, a trip to the pet store can feel like being a kid in the candy shop. But most of the items you can purchase cost far more than a nickel or a quarter.

You could use a pet loan to purchase supplies from the pet store, such as feeding dishes, bedding, treats, and toys. (If you’re hoping to finance your own pet store, on the other hand, you’d probably want to look into a business loan.)

Can I Get Pet Financing With Bad Credit?

Like any type of financing, the better your credit, the easier it is to get a pet loan — especially since, again, it’s an unsecured form of debt and therefore riskier for the bank.

While many factors about your financial situation will be assessed, like your income, other current debts, and job stability, you’ll likely need a credit score of at least 610 or higher to qualify. And some banks may have a higher minimum credit score than that.

💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

Reasons to Take Out a Pet Loan

From a financial stability perspective, it may be a good idea to avoid going into debt to take care of your pet, though in some cases, a pet loan may be the best option.

For example, if you need to take out a loan to afford a pet at all, it might be worth waiting until you’re in a stronger financial state before getting into pet ownership.

But if you already have a pet and are facing unexpected medical costs, taking out a pet loan may make more financial sense than, say, going into credit card debt for treatment. Still, a personal loan can impact your overall financial situation in a multitude of ways, so it’s worth considering all your options before making a plan.

Alternatives to Pet Loans

If you’re considering taking out a pet loan, here are some alternatives to put on the table before you sign the paperwork.

• Pet insurance can help lower the overall cost of veterinary care from the start. However, like human insurance, you may need to be careful to work with a vet who’s in-network in order to glean any savings.

• A veterinary payment plan may be available at your local clinic and may even offer 0% interest options based on your financial need. If you work with a private veterinary clinic, it’s worth asking if they have payment plans available, even if they don’t advertise them.

• Veterinary schools and low-cost clinics may offer the same care at a lower cost, whether to help new veterinarians with their training or simply to provide options for lower-income pet owners in the community.

• Savings can be a good option if you have an ample emergency cushion saved up, and may allow you to avoid going into debt. However, if your pet loan is at a low enough interest rate and you’re still working on building up an emergency savings fund, you might not want to break into it for Fido.

• Credit cards are another option that allow you to pay off large bills over time, and some credit cards offer a promotional 0% interest period. That said, if you are unable to pay off the debt in full before the promotional period ends, you may be stuck with an APR of 20% or higher, and that kind of interest rate can make it even more challenging to get out of debt.

The Takeaway

A pet loan can help you finance some of the costs of pet ownership. But keep in mind it’s still a form of debt, so it’s worth carefully considering alternative options before you sign up.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Can I take out a loan for a dog?

If your credit history is strong enough, you may be able to take out a pet loan — a type of personal loan — to pay for the cost of adopting or purchasing a dog, or any of the costs associated with their care thereafter. However, if you can’t afford to own a dog out of pocket, you’ll want to think carefully about whether or not it’s a smart financial move.

What credit score do you need for pet financing?

While each bank has its own specific requirements around minimum credit scores, for most personal loans, including pet loans you won’t be able to qualify with a score lower than 610. (Of course, your credit score isn’t the only thing that matters. The bank will also look at your income, existing debts, job stability, and more.)

What do you do if you can’t afford to keep your pet?

There are many options available to those who’ve found they can’t afford to keep their pets. While turning your pet over to a humane shelter or otherwise rehoming them with a trustworthy family is one way to go, you may also be able to lower the cost of pet care by visiting low-cost veterinary clinics or taking out a pet loan.

Photo credit: iStock/AleksandarNakic

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Mar

2024

7 Federal Programs That Help Borrowers Pay Off Student Loans

By Melissa Brock | Fresh Out of School, Student Loans, student_loan | Comments Off

Approximately 61% of college graduates have student loan debt, according to data from the National Center for Education Statistics, and most of that money owed (more than 90%) is in the form of federal student loans. In other words, if you have student debt, you are not alone.

Federal student loan programs are funded by the federal government, and while virtually no one likes being in debt, there’s an upside here. These programs can not only help you pay for college but also repay what you owe in different ways, to suit your particular situation.

In this guide, you’ll learn about the types of federal student loans available and the tactics federal student loan borrowers can use to eliminate their debt. There’s likely to be a plan that helps you balance your budget and enjoy life while paying off what you owe.

Types of Federal Student Loans

The types of federal student loans include the following. The federal student loan program includes the Direct Loan program, and the Direct Subsidized, Unsubsidized, PLUS, and Consolidated loans exist under that umbrella.

• Direct Subsidized loans: Direct Subsidized loans help undergraduate students (who are eligible and demonstrate financial need) cover the education costs. In terms of when the interest accrues, that doesn’t happen while you are in school at least half-time or during deferment.

• Direct Unsubsidized loans: Direct Unsubsidized loans, on the other hand, help undergraduate, graduate, and professional students cover the costs of education. These loans are not need-based, but the government does not cover the interest while you’re in school.

• Direct PLUS loans: Graduate or professional students and parents of dependent undergraduate students can get Direct PLUS loans. You do not have to demonstrate financial need to get a Direct PLUS loan, but you must undergo a credit check.

• Direct Consolidation loans: Direct Consolidation loans let you combine your eligible federal student loans into a single loan with a single loan servicer. This helps reduce the complexity of paying on multiple loans.

How do you get a federal student loan? You file the Free Application for Federal Student Aid (FAFSA), and as long as you’re eligible for federal student aid, the financial aid will appear on your financial aid package at the school you apply for.

💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

Federal Programs for Student Loan Borrowers

Among the federal programs for student loan borrowers are government grants and tax deductions, as well as federal student loan programs that can help with repayment. Among these are income-driven repayment plans, deferment and forbearance, and forgiveness. Here’s a closer look at some of your potential options as you pay off student loans (yes, you will make it happen).

1. Government Grants

Federal grants can also help cover college costs for students attending college or career school. You don’t have to pay back grant money unless you fail to meet the qualifications for the grant. (In this way, they aren’t repayment plans but coverage of educational costs upfront.)

For example, you may be able to take advantage of a Pell Grant or a Teacher Education Assistance for College and Higher Education (TEACH) grant.

• Pell Grant: The Pell Grant is a need-based grant awarded by the US Department of Education to undergraduate students with high financial need. The Federal Pell Grant maximum is $7,395 for the 2025-2026 award year between July 1, 2023 and June 30, 2024.

• TEACH Grant: The TEACH Grant offers funds to students who plan to teach full-time for at least four years in a high-need field. They must meet the service obligation after graduation. For example, they must work in a low-income elementary school, secondary school, or educational service agency.

2. Income-Driven Repayment Plans

When it comes time to pay off federal student loans, the Department of Education has the following income-driven repayment plans, which aim to keep student loan payments at a comfortable level:

• Saving on a Valuable Education (SAVE) plan: The SAVE plan, which replaces the REPAYE plan, calculates your monthly payment amount based on your family size and income. It offers the possibility of forgiveness in as little as 10 years for some borrowers, and the payment cap is 10% of discretionary income and that may drop to 5% for some from the summer of 2024 onward.

• Pay As You Earn (PAYE) Repayment plan: The PAYE plan means your monthly payments equal to 10% of your discretionary income, divided by 12. It will never amount to more in payments than the 10-year Standard Repayment plan amount. Expect a 20-year term.

• Income-Based Repayment (IBR) plan: The IBR plan means your monthly payments are equal to 10% (15% if you’re an older borrower whose loans date to before July 1, 2014) of your discretionary income. Repayment terms are 20 years for new borrowers; 25 years for older borrowers.

• Income-Contingent Repayment (ICR) plan: The ICR plan means you’ll make monthly payments — the lesser of what you would pay on a repayment plan with a fixed monthly payment over 12 years or 20% of your discretionary income, divided by 12. The term is typically 25 years.

💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

3. Tax Deductions

Looking for good things about filing your taxes? Here’s one: When you claim the student loan tax deduction, you claim the interest you paid on your student loans, whether they are federal or private. You can deduct student loan interest up to $2,500; you don’t need to itemize to get the deduction.

To be eligible to deduct student loan interest, you must pay interest on a qualified federal or private student loan for you, your spouse, or a dependent child during the tax year. You must meet modified adjusted gross income (MAGI) requirements, which is your annual gross income minus certain deductions. You must not have a filing status of married filing separately, and someone else may not claim you as a dependent.

4. Military Service

You may remember the original G.I. Bill from history class, which allowed military service members to attend school after World War II. You can still get help paying for school if you currently serve in the military.

The branches of the United States Military offer loan payment programs that can help you pay off your federal student loans, such as the Air Force JAG program, Army College Loan, Army Reserve Loan, National Guard Loan, and Navy Student Loan repayment options.

Research how military loan repayment programs work for your respective military branch to potentially pay off a significant portion (or even all) of your student loan debt.

5. AmeriCorps

You can also consider using AmeriCorps as a vehicle for paying off your student loans. AmericCorps is an organization through which individuals can dedicate themselves to service and volunteering in the United States.

AmeriCorps volunteers can qualify for Public Service Loan Forgiveness (PSLF), meaning they can get their federal Direct student loans forgiven (“forgiveness” means you don’t have to pay back the loan and can stop repayment) after making 10 years (120 months) of qualifying payments. AmeriCorps service is considered the “employer” for PSLF.

6. Deferment and Forbearance

Deferment and forbearance are similar in that they allow federal loan borrowers to temporarily lower or stop making payments on their federal student loans for a certain period. The steps to achieve deferment and forbearance are also usually the same: Contact your loan servicer, submit a request, and provide the requested documentation.

However, the main difference is that interest does not accrue on some Direct Loans during a deferment. When your loan is in forbearance, you must pay the interest that accrues on your loans.

7. Forgiveness

Another option if you’re looking to pay off federal student loans could be forgiveness. As noted above, this term means that you don’t have to pay back some or all of your federal student loans.

As with serving in AmeriCorps, you may be able to get your federal student loans forgiven via the PSLF program if you work for a government or nonprofit organization. The PSLF program forgives the remaining balance on your Direct loans after you make 120 qualifying monthly payments under an accepted repayment plan and as long as you work full-time for an eligible employer.

You may also receive forgiveness of up to $17,500 on Direct Subsidized and Unsubsidized loans under the Teacher Loan Forgiveness (TLF) program. You may receive forgiveness if you teach full-time or complete five years in a low-income school or educational service agency and meet other qualifications. You may also receive forgiveness for consolidation loans, which occurs when you combine all your loans into one payment.

Note: Private student loan forgiveness is not available as it is with federal student loans. Still, there are avenues you can pursue if you are struggling to repay what you owe, such as discussing hardships with your private loan lender or seeking credit counseling.

The Takeaway

The majority of college graduates have student loan debt, and paying it off can be a stressful process. But there is help. If you have federal student loans and are looking for ways to pay them off as affordably as possible, you likely have plenty of options. Tapping into income-based repayment plans, considering military service or AmeriCorps, deferment, forbearance, or forgiveness can help you as you work to manage and eliminate those student loan payments.

For some people, refinancing their federal loans with a private loan may make sense and be a way to lower their payments or speed up their repayment schedule. However, it’s important to note the following:

• If you refinance federal loans with a private loan, you forfeit access to federal protections and benefits, such as the deferment, forbearance, and forgiveness programs mentioned above.

• If you refinance for an extended term, you may pay more interest over the life of the loan, so think carefully if this suits your overall financial picture.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FOREFEIT YOUR EILIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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.

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