Still struggling with the domino effect of not saving for my yearly property tax, combined with no savings. December is a month that we get a third paycheck and I am so looking forward to putting that to good use. But more on that later.
11-17-16 Debt Balances and Minimum Payments
|Debt Type||Balance Due||Minimum Payment|
|Credit Card 1||$0.00||$0|
|Credit Card 4||$0.00||$0|
|Credit Card 5||$180.00||$0|
|Credit Card 2||$347.00||$100|
|Credit Card 3||$552.00||$94|
|Total Debt Owed||$48,167.00|
Woah, what did we do in November!
To start with, I did pay some on Credit Card 2, somehow I recorded the times wonky and the payment carried over to the wrong month.
Still no progress on Loan 1 but hopefully that will change soon.
See that new, enormous Loan 3? Wait, I thought we were getting out of debt!
No, I didn’t go buy myself a diamond ring. Or a new horse. Ha ha! Funny how those could be about the same price. Hmmm.
I had sort of an epiphany. That is, I asked God and I asked again, was this the right choice? We went to our bank and got a personal loan to pay off those two high balance cards. (Note: Credit Card 5 was in the middle of a cycle, so there were a few transactions/interest charged, it now has $180 left)
Let me tell you why I thought it would benefit us in the first place, so you don’t think I’m saying consolidating like that is best for everyone. It’s also not part of Dave Ramsey’s method (he actually says doing this is really accomplishing nothing. You’re just moving the money from one place to another), so I did this one on my own. On one hand, he’s correct. On the other, this isn’t a 0% intro balance transfer, it’s a closed loan that will end regardless, so it’s a little bit different.
- Credit Card 4 had a 22% interest rate which only lowered my balance by $30 a month, if that.
- Credit Card 5 wasn’t too bad at 15.24% but the balance was super high and I kept thinking, these two cards aren’t going to be much lower by the time I get to them.
- Hence, I looked at my bank and saw that their personal loans are 10.75%.
- You do the math…that saves me a lot in interest. If I took the entire 22 years or whatever to pay off the credit cards.
- The combined payment of that loan for 5 years was also about the same as my two separate payments, so not paying much more per month either. Win/win.
Should you look at personal loans to payoff debt?
Really I think it depends on your situation. For me, I sought God’s advice, so I went with it. It may not fit for everyone, but to me there were some benefits. I would say, examine your debt closely and see if it really would benefit you before making that decision.
Let’s pretend that I paid only the minimums on these two cards. For giggles sake. Just by doing this loan, I saved around $10,000 and 16 years. So even if I do take the full 5 years, (which I hope I won’t) I look at it as really worth it.
I could have kept going the way I was but I really didn’t see a downside to doing the loan. Like I said, I prayed about it a lot and God showed me it would help overall because I do still plan on rolling that into the payoff plan, I don’t plan on taking the full 5 years to pay it off. Even if I don’t pay extra, I think I needed that closure. The temptation of having a credit card that has no balance is hard to resist when things get tough.
I do want to repeat, that this was a personal loan through my bank. Not debt consolidation or moving to another card with an intro balance transfer rate. Both of those options have advantages and disadvantages and neither is good for my situation.
Now down from $50,769 to $48,167 for a grand total of $2,602 in 5 months. Maybe not a lot by some standards but to me, this sounds really good. It’s less that I owe to someone and I know I’m going to do so much better in the months to come.
I personally did not set a time goal for this. I don’t know if that helps or hinders me but it took me 10 years to accrue this much debt. When I do get out of it, I’m not sure I care how long it will take. Maybe that’s a mistake on my part. However, by not setting an end date and making it a lifestyle change, not a temporary goal – I feel like my future will be better. I don’t want to get out of debt super fast and then turn around and get sucked into the ugly trap all over again.