If you are struggling to make your credit card payments every month and wondering when and how you will ever pay down your credit cards, it may be time to consolidate credit card debt using a personal loan.
First, ask yourself these questions:
Are you paying high interest on your credit card debt?
Do you have a large credit card balance?
Are carrying balances on multiple credit cards?
Are you looking for alternatives to expensive cash advances from your credit card?
Do you have medical expenses or large purchases that you would rather not put on a high interest credit card?
If you answered “Yes” to any of these questions, a personal loan might be a good option.
How Personal Loans Can Help Lower Your Debt
If you have been carrying credit card debt, or you need to finance medical expenses or other large purchases and don’t want to use high interest credit cards, a personal loan may be a good option. Personal loans often offer lower interest rates and better payment terms than credit cards do.
Today there are many types of personal loan lenders in the marketplace. Some cater to high credit borrowers. Others are low credit friendly. In addition, if you consolidate credit card debt with a personal loan, you may be able to obtain a personal loan with a lower monthly payment that can free up some cash for emergency savings, or a small investment fund to hedge your debts.
If any of the scenarios below apply to your situation, consider looking into a personal loan.
If the interest you’re paying in credit card debt is greater?than the interest you can get on a personal loan. (Remember to look at all the associated expenses on the credit card and the loan -? both interest and fees.)
If you’re looking to consolidate multiple credit cards into one simple, lower monthly payment.
If you’re looking to finance a large purchase or medical procedure at a lower interest rate.
Before Taking A Personal Loan, Do These Things
Call your credit card company and ask for better terms. Sometimes you can negotiate a lower interest rate, smaller monthly payment, or fee waivers.
Look into transferring high interest credit card balances to a 0% APR credit card. Many credit cards offer an introductory APR of 0%, up to the first 12-24 months. If you think you can pay down your credit card during the introductory period, this may be a good option for you.
If you decide to take on a personal loan,?research the lenders. Make sure there are no pre-payment penalties, fees, and no introductory rates that then go up,
Compare offers from different lenders. Don’t go with the first offer you see. It’s now easy to compare across many lenders at once.
Don’t use your cards!?There is no sense in consolidating credit card debt only to run up your credit cards again. Put them in a? safe place but don’t cancel them. Keeping your accounts open and paid off will increase your credit score.
Go on a spending diet. Cut back on all the little things that add up at the end of the month. Turn it into a game. See how much you can save. Use our?free app to help you stay on top of your game.
Set up a budget. Figure out where your money is going. Designate different buckets for each spending category. When that category is depleted (e.g. movies), don’t spend beyond it.
We were camping on the shore of a gorgeous prehistoric lake. The sun was still spread across the horizon as the moon slipped up over the pinnacles in the distance. We sat, my old college friend and I, sipping cocktails by the shore. It was breathtaking.
We hadn’t seen each other in years, we had a lot to catch up on. But all my friend could talk about is how much better it was in the old days, when he still had his house boat. It seemed as if he didn?t see the moon. Or rejoice at the pelicans diving majestically through the pink dusky sky to disrupt the mirrored surface of the lake. He kept mentioning how much better it was before. And as a result, it was stealing from him. Stealing a piece of his present life.
My friend?s problem was deeper than a house boat, however. Like many money regrets, it was part of a bigger story. My mate had sold and/or refinanced damn near anything of value?to fund his son?s pro-skiing career, which later came to an abrupt halt when the money ran out. I empathize with him. He took a calculated risk. It was his son. I would have done the same.
We Aren’t as Unique as We Think We Are
So many people are living under the constant stress of financial instability. Many have money regrets, but few have any idea how to move on from them. How to bite the bullet, take it all in, explore options, and begin to create a new money story.
My friend still had some equity in his refinanced house. But he admitted that he was flat out ignoring a personal loan from several years prior. And although he refused to actually look at what he needed to do to get out of this mess, he couldn?t stop mentioning it. It was the undying topic of conversation of the weekend. And it made me very sad. I was worried about him, and heartbroken that this issue was wasting the short time we had together.
?Listen,” I finally interjected. “I get it! I really do.”
But he didn?t want to hear that. He insisted that no one could possibly understand what he was going through. Sadly, he’s wrong. Truth is most people have money regrets and financial stress. And a fare amount of them refuse to look at the extent of the damage, which is precisely what they need to do, to get over money regrets once and for all.
Ignored debt is like a speeding train, downhill, without brakes.
I wanted to tell him how I’d been trapped in consumer debt working a shit job for a corrupt company for which I had to commute 4 hours a day. It was hell. I was stretched from paycheck to paycheck. I couldn?t afford to make a move. I couldn?t afford to quit. And if anything came up, an illness, an emergency, an unexpected expense, it had to go on the card – just digging me in deeper.
I wanted to tell him that when I finally pulled my head out of my ass and faced the fact that I was over 50, broke and in debt,?it was truly horrifying. But then came the acceptance. And then, and only then, came ideas. Once I knew exactly where I stood, I could determine which options were available to help me. And I could begin the long crawl out.
How to Transform Hopelessness Into Hope
If he knew how hopeless I had felt. How I struggled with paralysis for years until I finally got the courage to bite the bullet. How it all had driven me to a place so dark that I could no longer feel the peace of the rising moon above a body of water.?
And even though my friend wouldn’t have believed me, (because he was comparing his now to his past,) he is in a much better financial situation than I am. He has equity in a house. He owns several vehicles. He actually has more options than most. But his past was blinding him from moving forward. He’s just not ready to take that scary first step in getting over money regrets and moving on: ?
Step 1) Discovery
If you don?t know what the disease is, you cannot treat it. Period.
I?m not going to bullshit you, it?s not easy to pull up all of your accounts and write down how much you owe and the interest rate you?re paying. It?s harsh to compare the debt you are in to the balance in your bank account, the equity left in your house, or the balance of your retirement fund – ?to do the math.?
This is the part my friend can?t fathom. He doesn?t want to know how bad it is. And I understand this feeling. But everyday he looks aside, the compound interest on the errant loan is eating away all of his advantages. Ignored debt is like a speeding train, downhill, without brakes.
Know your strengths (assets). Know your weaknesses (liabilities).
I wanted so much to tell my friend to swallow his pride, look at his situation square in the face, and take a deep breathe. I wanted him to get that you can?t begin to move on from money regrets until you can actually quantify your current financial strengths and weaknesses. Knowledge is power when it comes to repairing your finances.
Step 2) Research Your Options
Once you know where you stand, it?s easier to see where you can go. Financial terminology may seem difficult at first, but it can be learned. All you need to do is get interested. Seriously, if you are reading this, you can Google anything you need to learn. You can find your options, and decide what plan of attack is gonna get you in better financial health.
Some of us have used our retirement for our children?s college tuition to try and save them from the disability of student loan debt. Others have made investments that didn?t pan out. Some have been leaching off of the equity in their house for years. Or we?ve been using credit cards as an income source to maintain a certain living standard.
Different Solutions for Different Problems
Everyone?s situation is going to be different. But what may be the same for a lot of us is that we can?t keep living like we have been and expect to get away with it in the long game. If you aren?t finding any options that can help you with your current situation, then you may need to take a deep look inside yourself and ask whether you need a lifestyle and/or a mindset change to create options.
In my case (dog paddling through the depths of minimum payment hell after spending all of my money on my kid’s education), I looked at the options available to me and ran different scenarios out in my mind.
I asked myself questions such as:
If I use limited zero interest balance transfer cards, I will have to move my money again eventually or end up in a worse situation. Do I want to have to worry about this?
Can I cut my living expenses by moving to a different area?
Is my industry holding me back from earning more income?
Could I handle a side gig on top of my full-time job?
Step 3) Action?
After researching options available to me like balance transfer cards, consolidation loans, or picking up a part-time job, I finally settled on refinancing all of my consumer debt at a lower interest rate than any of my cards with a personal loan. One payment a month for 5 years. Fine. Done. No more stress.
I also eventually moved, changed my career, and completely changed my lifestyle to be able to live within the range of my budget. This flowed somewhat naturally, because once you get really interested in experimenting with how little you can get by on, you tend to equate saving with freedom. Your mind opens to creative ways to get out from underneath the constant pressure of debt.
After researching, make a plan and take action. It could be by refinancing something. It could be by liquidating assets. It could involve completely changing your lifestyle, where you live, where and how you work, or what you drive.
Once you get really interested in experimenting with how little you can get by on, you tend to equate savings with freedom.
The struggle of trying to ?keep something? going when you don?t have the money to do it is horribly stressful. I can?t tell you the relief it will give you to finally address your biggest stressors in the face, brainstorm the real options open to you, and then take action.
And you will start to notice a spillover into other areas of your life. There is something about accepting where we really are that is comforting and stable. The energy previously wasted on consistent financial stress and worry is now freed up and available for cool life stuff. Like chilling with an old mate by an old lake.
The Bottom Line
No matter how bad you think it is now, it could be worse. And if you do nothing, it will get worse. And you know what?s worse? You already know this…
If you are sitting around and complaining, it just means that it?s stressing you out. It?s stealing your life. Just like it stole that one beautiful night at the prehistoric lake from my friend, and inevitably, from the people around him, too.?
Find out where you are. Know your liabilities and assets (if you are lucky enough to have any.)?The pre-emptive strike for financial disaster is to stop the bleeding, start the healing, and be patient with yourself.
Discover, research, and take action. And remember to live and find joy in what is in front of you.