Advice On Managing School/Personal Loans, Auto Loans, & Credit Cards
posted on 12/04/2009
Struggling with personal finance? Let me tell you about my situation and what I did to dig myself out of it.
There was a time not too long ago where I applied and got a credit card with a $10,000 limit, applied and got a personal loan for $7,500, applied and got an auto loan for $25,000 all while paying off a previous credit card balance and managing a federal student loan of $35,000 for my college degree (what an incredibly expensive piece of paper- who knew common tree fiber would be worth more than gold!). Of course, I did all of these things having been employed in an industry that paid quite well. Since I was making so much money and had been doing it for five years, creditors were eager to throw money at me. Now, after all the smoke is cleared, I am no longer employed with that firm and making substantially less money. Unfortunately, the bills don't reduce as the salary did. What I was left with was a nearly maxed out credit line and a massive amount of loans, and therefore interest, left over to manage each month. Since I was making 60% less than what I was, I had to find a solution that would rectify the gap in what I was making then vs currently. I considered a number of solutions, but ultimately this is what has made life manageable again. I would recommend that anyone who is severely struggling with finances exhaust all options rather than just sitting back and accepting the position you are in as your fate.
First and foremost, I refinanced my auto loan and extended the loan term an extra two years. This almost reduced my auto loan payment in half. I was off to a good start. It should be noted that I tried to refinance while I was between jobs (ie unemployed). Bank said absolutely not. I needed to get another job first before this could be considered. I don't understand the logic in it, as I was making NO money at the time, but that was the case. With the two credit card lines, the personal loan, and the school loan, things were a little more difficult to work out. I essentially refinanced my personal loan (with a cosigner now, which I never needed before), was able to pay off the first credit card balance and a good chunk of the $10,000 credit balance. The nice thing about loan interest rates vs credit card interest rates is that they are logical, ethical, and make sense. Credit card interest rates are absurd and should be criminalized (yes, we all know what we are getting ourselves into when we give them out social security number and our signature). I ended up paying substantially less than what I was when all of the bills were pre-refinancing and consolidated. Again, it should be noted that I had always paid my bills since I had money and therefore my credit score was really high. That helped in the refinancing processes. And I used a cosigner in both cases. So, if I mess up the fault lands on someone else. Obviously, I don't intend to let them down. There are little things you can do to make organizing and managing, and therefore reducing the stress surrounding, your finances. Check out the software Microsoft Money, or go online and read about managing debt.
See the URL provided with this post. You will find a short clip to helpful and easy ways to introduce structure into your financial situation. Once everything is organized, managed, and put into perspective, making intelligent and correct decisions about your finances becomes a lot easier. What's more, the program being used is Excel which most people purchase with Microsoft Works and is easy to use.
Good luck and be strong!
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