How to Afford a Loan and Fund Your Dreams

We all have dreams. Some want to travel, others start a business, that perfect wedding, or sailing off into the sunset.

fund dream

Whatever your dreams are, making them reality often requires funding, and too often, we fall short due to a lack of it. Securing a loan can solve your immediate financial shortcomings and enable you to live the dream that would otherwise have remained unfulfilled.

A loan should do that for you, and it can, but only if you can afford the repayments.

There are steps you can take, and they do involve some innovative thinking and personal sacrifices, but taken correctly, they can help you repay that dream loan.

1. Start by Assessing Your Present Situation

Your dreams may not yet be a reality, but turning them into one sure is.

Carry out a financial audit on your current situation, write it all down, use excel, and add every expenditure. The results can often be overwhelming, but it will give you a clear idea as to where you stand financially and what you can afford to borrow.

An excellent place to start is by calculating all existing fixed monthly repayments.

Such as:

Mortgage payments or rent
Savings
Car repayment
Child care
Education
Medical
Any existing loans + interest

Next, monthly bills, examples being:

Food
Home fuel
Electricity
Services such as phone, Wi-fi, and TV
Water

Finally, extra activities like:

Gym memberships
Hobby activities
Dining out
And anything else, that if you had to cut it, you could.

Now you have your monthly expenditures; you can subtract it from your monthly income, and the amount left over is what you can consider using towards financing your new loan.

But what if there isn't anything left over? Or even more distressing, what if you're short? Let's look at ways of tackling any shortfalls in the next suggestion.

2. Cut Your Cloth to Suit Your Means

Once you've calculated your credits and debits and assuming the result wasn't a favorable one, the next advisable step is to create and live by a minimum needs budget.

A minimum needs budget is what the name suggests; it's the expenses you need to live and nothing more. For example, the monthly outgoings on your fixed monthly repayments, are the things you can't live without, but it might be possible to reduce certain items on the monthly bills list.

But what about food, Wi-fi, and cable TV!! I hear you shout.

The good news is we can change our eating and shopping habits, and do you need all that cable TV? Let's not bring Wi-fi into the equation!

Where there's pain, there's gain, if you don't need it to live (this is relating to your extra activities list), cut it, ouch! Now your monthly expenditures have been reduced; the total remaining should have increased, and you could use it to repay your loan.

But what if the numbers still don't add up? Stay with me.

3. Can You Increase Your Current Level of Income?

Increasing your income level has never been easier, and they're now numerous ways of doing it. Have you heard of the term "Gig economy"?

There are thousands of part-time gigs (jobs) advertised online now, and they range from driving for Uber to outsourcing a skill that you have. The list of possibilities is endless.

Here are a few ideas and some of the platforms that you can use:

Driver for – Uber, Lyft
Food deliver for - Uber Eats, Deliveroo, Instacart, Postmates, Amazon
Handyperson / odd jobs in your local area - TaskRabbit and Airtasker
Advertise your skill on – Fiverr - Upwork, Freelancer, PeoplePerHour, Guru, Outsourcely

People advertise all sorts of services on platforms like Fiverr, to get a better idea.

4. Could Your Home Be the Answer!

There are a surprising number of ways that you can use your home (not a rented property) to earn extra income, and with some ingenuity, this passive income could be the answer to financing your dreams.

The approach of using your home as a passive money- making machine can depend on many factors, size, location, and legalities, to name but a few.

One method is releasing home equity. It works by using your home as collateral towards a loan, and Interest rates are commonly lower than that of credit cards, etc. But where there are pros, there are cons. Always seek professional advice to gain a complete understanding and answers to any questions, such as, how does paying off debt with home equity work? Before proceeding.

Other options available for using your home are:

Rent a room - long term
Air B&B
Take in foreign students
Rent a car parking space
Advertise your home as a movie location
Provide storage space

THE LAST WORD

Your dreams are as individual as you are, as will the method you choose to achieve them. Whichever you use, it can help you secure and repay a loan that`s comfortable for you, and hopefully, enables you to make your dreams come true. Dream on!