Monday, September 8, 2014

Debt Breakdown Part III : Personal Loan

When I got my first full time job out of college, I was so determined to get my debt paid off. At the time, I probably had about $10k in credit card debts - other than Visa, Master Card and Amex. I also had Best Buy, Nordstroms and a gas card from Shell. I wasn't reading any PF blogs at the time but mostly CNN money or MSN Money where they give little tid-bits on what to do with CC debt etc. I thought it would be a great idea to consolidate into a personal loan since my bank was offering me a great APR. I thought this will give me an actual time frame to pay off debt. I borrowed against my car about the time I paid it off.

That obviously did not happen to plan - what happened was the now "paid off" credit cards were used to keep up with the Joneses. I felt like I had so much more room to spend money on - It started with a full on new work wardrobe, Traveling since I get two weeks off from my full time jobs, eating at these schmacy restaurants etc.- all courtesy of American Express, Visa and MasterCard. Thanks guys! I felt like I was on top of the world because now I can 'afford' everything and at this time, I was getting paid more.

The whole vicious cycle happened again and now I am back to square 'two' lol. My second consolidation happened exactly last year to get these credit cards paid off - obviously there were some leaks again because as you can see I have credit card payments within my totals. I am waiting for the day to pay off this current personal loan.

Lesson Learned 
I promised myself that this was going to be the last time I will take out a personal loan to consolidate credit cards. I am determined to pay this off now before paying off CC#1 just to get it off my back.

Have you ever used a personal loan to consolidate credit cards?


  1. I had a line of credit while I had credit cards but I never thought of using it to consolidate my debt (back in the day I had no PF skills whatsoever so I didn't even think about lower interest rates, etc). Instead I just rang up $10,000 on my line of credit and then various other balances on my credit cards. Oops! It took years to get them all down to zero, but boy did I learn to use credit responsibly... I guess some good came of my idiocy after all haha

    1. I know - so many oops for me too! At least we all learned from our mistakes - I just want to be able to pay it off already and be debt free!

      Thanks for dropping by =)

  2. It is a vicious cycle that needs to be broken. We kept running up our LoC by overspending on our credit cards. Sure, our credit cards got paid every month, but LoC kept growing. Even though you think you've learned your lesson, sometimes you find out you haven't really, so take care there and track your spending to a budget. That's my only advice because it's the only thing that stopped our cycle. Just thinking you are living prudently is not enough. You need cold hard facts and evidence.

    1. So true Deb! Since I have been paying off more into my credit cards - the LOC keeps going up and I keep getting more offers of balance transfers. It's so tempting to spend again, but I have been trying tor restrain myself. I just cant wait to pay them all off!