Your One Stop Resource for Saving Money.
Debt Consolidation Loan Testimonial
A Personal Look at a Debt Consolidation Loan
The day I married Rachel, I knew we'd made the right decision to invest in the wedding of our dreams. After we got back from the honeymoon, we made another smart decision to consolidate our debt. Rachel had credit card balances left over from college as well as a high-interest, unsecured loan that she had used for wedding expenses and a down payment on her car. I had student loans and a few credit cards of my own.
We got all our bills together and added up our monthly expenses. It turned out we were both paying more than we'd thought. I couldn't believe how much Rachel was handling with just her university fellowship. That's when she admitted she'd been struggling a lot more than she'd wanted to tell me.
At first, we thought about just transferring all our balances to whichever credit card could offer us the lowest interest rate, but Rachel pointed out that we also needed to think about what would be best for our credit rating since we wanted to move into a bigger house in a few years. After taking all of this into consideration, we decided that even though we'd only bought our house about a year before, a debt consolidation home equity loan was the way to go. I scheduled an appointment to get more information.
After talking to a loan officer, we realized we could save about $620 a month with a debt consolidation loan – it would lower our interest rates and be tax deductible. We brought all of our most recent statements with us to the meeting with the loan officer, who took a look and made a few suggestions as to what we should pay down and pay off to improve our credit.
We closed on the loan a few weeks later. When the funding came through, the portions that we'd decided to use toward specific accounts were given to us in the form of checks already made out to our creditors in the amounts we'd discussed.
First, we paid off Rachel's unsecured loan, and I made a large payment toward my student loans. Next we paid off two of our five credit cards, and paid down the other three. I added it up, and the reduced interest alone accounted for about half our monthly savings.
For the next few years, we tried to live as sensibly as we could without cutting out all of our amusements. About 27 months after taking out the home equity loan, I sat down to take a look at our finances. I had my eye on a house that was on the drive home from work. I'd noticed a "for sale" sign when I'd driven by that day. Thanks to our debt consolidation two years before, I was pretty sure we would be able to afford it. Our debt-to-income ratio was now much lower than when we had the credit cards, and I'd been saving up the extra monthly amount for a larger down payment.
That night when Rachel came home from work, I couldn't wait to tell her what I'd discovered. I thought I was the one with the big news, but it turned out Rachel had some news of her own.
"I hope you're ready to be a father," she said, unable to stop smiling as my jaw dropped. After recovering from my shock, I was thrilled, and through all the confusing things I was feeling, I was glad we had taken the steps to secure our finances with a debt consolidation loan when we had. I had no idea what being a father would be like, but I couldn't have been more thankful to be entering into a new part of my life with one less thing to worry about.
© 2006 - 2008Bills.com LLC. All Rights Reserved.