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Using Personal Loans to Save Money for the Future

It may seem counter-intuitive, but sometimes, a small personal loan can be the best path taken toward reducing overall debt. Of course, there are the standard pieces of advice regarding using a loan for debt consolidation, which will improve one’s credit score and can reduce overall monthly payments. Both of these methods are valid and valuable uses of the money, but there are other ways to reduce debt as well.

When one is trying to save money for the future, especially during precarious financial times, the immediate inclination is to only spend less money. This is a prudent course of action, although just as we often hear the statement “you have to spend money to make money.” Sometimes, however, one needs to spend money to save money.

Costs for everything are increasing. This is especially apparent in our utility bills. Whichever form one uses to heat and cool one’s home -- gas, electric, oil -- the cost is going up. Taking out a loan to make basic home improvements can be a means of planning for the future, for yourself, your children, and as an investment in green technology; all of which can be beneficial to the growth of the economy as well as the planet.

A loan for such a purpose does not have to be huge. A few thousand dollars or even less, can lead to substantial savings in one’s energy bills, and most personal loans can be obtained with a far lower interest rate than making the same purchase with one’s credit cards.

The amount spent on these improvements is up to the individual and should only be decided after some research. A high-efficiency washer/dryer combo usually runs in the $1400 range (it will also usually come with a rebate from the local power company); sealing off cracks and crevices with caulk, new weather-stripping and a new door sweep will be a few hundred. It may also pay to look into having insulation blown into the walls -- this will range in price depending on the needs of the home and the company involved. Revamping the entire HVAC system will cost more.

We tend to think of energy costs mainly in the winter when the need is strongest, but having improved insulation increases comfort and reduces energy use in the summer as well. All of these uses of a personal loan can essentially make the loan pay for itself, and can lead to financial savings in the future that can be used to reinvest in the economy or other aspects of the future.