Diving in head first

Sometimes, the only way to do something is to dive in head first. No blind spots. No looking back. Just go. As some of you may know, one of my new year’s resolutions was to save money. And because of my debts I find it rather difficult to save said money. So today, I grabbed the bull by the balls and went to my local bank advisor and enquired about a consolidating loan.

I have never felt more responsible. As I sat in his office, with him tapping away at the keyboard, I was a nervous wreck. With a loan, once you make a payment you can’t access the funds again which is very different to how I’ve been dealing (or lack thereof) with my debt. As long as I had a balance that’s high enough – even if I continue to made payments towards it – I would spend whatever credit I had available.

So I figured that the best way to finally get rid of my debt was to get a loan that will help me pay off my credit cards, laptop, and personal line of credit. It wasn’t an option to simply increase my personal line of credit because then I would still be able to spend the money again once I earned some credit back by making payments. Anyway, after my oh-my-god-I’m-never-going-to-get-out-of-this-debt- I’m-having-a-panic-attack-can’t-wait-any-longer stint of waiting, he finally reported that the automatic approval didn’t go through so he would have to send it through manually (this could take 2-3 business days). Great. More nerve-wracking waiting. “Oh ok.”

If I get this loan, I will not only need to make lower payments per month but I will be able to plan my finances better. The only thing I need to watch for is racking up more charges on my credit card. I do need to keep a credit card for airline tickets and other such online purchases, but I need to watch my spending. This should be a little easier because while I was living in Ireland I had to get a credit card, but Irish banks give you the option to have your entire balance due at the end of the period – an option he made me promise to chose. And I’m glad he did because this has trained me a little bit in paying attention to my credit card balance in mind when I’m spending actual cash.

I know what you’re thinking, “Why couldn’t you just do that with your credit cards now instead of getting a loan?” Because my balances had gotten out of hand, and I just couldn’t keep up with it. And because the balances were so depressing, I usually ended up spending more (money I didn’t have) to cheer me up. It was quite the vicious cycle I had gotten myself into. I really hope I get this loan so I can get a fresh start with my finances – even if it is later than I should have. I was “hmm’-ing and “huh”-ing about whether or not to gethe loan because every application you make to a lending institution lowers your credit score… but heck, it’s better late than never!

responses to “Diving in head first” 13

  1. Pingback: fragileheart.com | journal | You’re not missing a thing… » No catchy titles here, new year’s resolutions are tough to keep.
  2. Peri – I’ve actually been considering getting the loan for a while now but had to give my credit a little while to go up so that it didn’t hurt my credit score. You see my bank is so good, they even encouraged me to check my credit score on my own first before they made an enquiry. They explained to me that each time you apply for a loan or credit card they deduct points from your credit score… but that if you check your score on your own through equifax (only in North America) then there is no penalty against your score. It was a really good tip!

    I can’t wait for that feeling Peri… I forgot to call them on Friday to follow up so I’ll have to wait until Monday! I’m pulling my hair out!!

  3. I’m glad that you’ve recognised the problem though and you’re making an honest effort to get out of it. Getting out of debt takes at least 3 times longer than getting in. When you get out, the liberation you feel will be something that you’ll remember forever. You’ll think twice about buying things on credit after that. Believe me, I know.

    One thing that I didn’t know: Applying for credit lowers your credit score. I wonder why? Having credit that you manage responsibly actually improves your credit score. The only way you can get credit is to apply for it…

    Periapex’s last blog post..Deconstruction of an Apicoectomy.

  4. You are not married yet, and you are already in debt. Wow, you must be a big spender, eh? 😛

    Michael’s last blog post..Laptop Battery

  5. Ate Mae & Jillian – you’ve inspired me to write a follow up post! hehehe I’ll be responding to your comments in the next post okie? But for now, I just want to thank you so much for your concern. *hugs*

    Michael – It was when I moved out for a year while I was in school, and I haven’t really been able to recover from it… but it’s was a good lesson to learn.

  6. I agree with Maeyo, canceling your credit cards while you use the loan to pay them off is a really good move.

    We have debt we are trying to pay off as well and training ourselves to NOT use the credit cards at all was a BIG thing. Now if we can’t it afford right then and there, then we just can’t afford it.

    Good luck! With patience, discipline and a little knowledge, you’ll do fine!

    Jillian’s last blog post..Big Pimpin!

  7. Sweetie, you are not getting rid of the debt. You are just putting them together in one place. It is just an illusion of not having any debt but if you calculate it, it is more like getting stuck with the debt.

    Please don’t take me wrong. I just want you to understand what you are getting yourself into.

    With a Loan, you will have to pay for it in X number of years. I don’t know how it works in your banks but here, you get charged if you want to pay more than the set monthly payments.

    With a credit card, if you pay more than a minimum and ensure that you do for at least 6 months, you will be reducing your debt and you don’t have to pay extra in order to pay off more.

    For example:

    Debt: 1000
    Credit card % interest rate: 4%
    Personal Loan agreement: 4% for 5 years, monthly payment of 10$

    Credit card: If you can set aside 100 a month to pay your credit card or even more when you have some spare, you can pay off this debt in 10 months or less!!!

    Loan: You have to pay it for 5 years. Otherwise, if you pay extra, they will charge you a certain percentage. This means, you are in debt for 5 YEARS!!!

    You can calculate the interest rates. That’s just too much numbers for me to deal with. :p

    Oh and by the way, NEVER consider anything ‘FREE MONEY’! Even raffle-won money has tax! So when your credit card company give you so called ‘free money’ consider it as their way to lure you to make you pay them more. NOT FREE!!!

    If you will take this loan, I suggest you close your credit card and get a debit card. That way you will be more responsible with your spending.

    It will hurt in the beginning but once you are TRULY rid of it, it is such a fulfilling feeling. Plus, you will have more control over where your money goes.

    Anyway….. this is just a sisterly advise. Please don’t take it wrongly. I am just concerned.

    Hugz. All the best.

    Maeyo’s last blog post..Hats, Horses & Party

  8. Canucklehead – Sounds good to me!!

    Kelly – I can’t wait till I don’t have credit cards anymore either. It’s so annoying having that hanging over your head.

    Jen – Thank you 🙂 Ouch though, £200 is a lot :T Good luck buying a house!! I’ve seen a few episodes of Location, Location (is there a third “Location” in the title, I can’t remember), and finding ‘the perfect’ place in England is quite hard it seems!

    Ate Mae & Beekers – Thank you both so much!! The interest rate issue is another one of the other reasons it took me so long to apply for the loan… but the problem is that if I don’t do it this way now. My credit card debt will just keep getting worse, because as long as I keep meeting my minimum payments every so often the credit card company will increase my limit and then it becomes ‘free money’ again (but only on account of the depression caused by the high balances). You know what I mean? So I figured that even if the interest is higher, it’s the best way for me to get rid of my debt once and for all.

  9. Good luck! It is wonderful feeling when you have your finances on track and no debt. I second Maeyo’s comment. Just make sure that your interest rate on the loan is lower than your credit card interest rates.

    beeker’s last blog post..Bless Their Hearts

  10. I wish you the best. I do hope that you considered the interest rate of Loans compared to the interest rate of your credit card. If loan interest rate is higher, you will be paying more for the same amount if you take the loan.

    Anyway, I totally understand what it’s like to be in debt. 🙂 Retail therapy is just so expensive! and Very Addictive!!! hehehehe.

    Good luck!

    Maeyo’s last blog post..Hats, Horses & Party

  11. I feel for you. My boyfriend and I are buying a house so i am really having to sort out my credit rating an fast. I paid £200 off my credt card yesterday; it pained me. Hope it works out for you.

    Jen’s last blog post..Things to do for the best night in ever ; >

  12. I don’t have any credit cards. I use my debit card for airline tickets and online purchases. And when I don’t have any money, I can’t buy anything. Mr. Aerten, on the other hand, still has credit cards we’re trying to pay off. Ugh.

    Kelly’s last blog post..Thursdays Are Green

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