I just paid off FIVE credit card balances. FIVE!!!!!
Granted, I had to take out a loan to make that happen, but I am on financial cloud nine right now! So exciting to see debt balances go to zero, especially when I no longer have to pay interest rate charges every month on those balances.
I’ll go through the numbers here in a minute, but let me tell you, the great feeling for paying off debt is amazing. Woohoo!
Debt consolidation loans aren’t for everyone, but in my current financial situation, I needed one to help get this train back on track. I started my journey with 10 credit card balances. Then I jumped up to 12 credit card balances by adding 2 new cards with temporary 0% interest rates.
That’s 12 different accounts to log into every month to make payments. Even with automatic minimum payments, I need to log in to most accounts every month.
But with this debt consolidation loan, I was able to cut out 5 credit card balances! I am now down to a total of 6 credit card balances (had 10, added 2, paid off 2, added charges on a paid off card so 11 balances, then paid off 5 balances, leaving me with 6 balances left…everyone keeping up so far).
Here are the benefits for me:
• I freed up $281 in monthly cash flow.
• I can put that extra cash towards paying down debt faster.
• No more interest to pay on 5 credit card balances.
What a great feeling to look at $0 balances!
There is always a down side, well most of the time. In this case I can only see one real negative to getting a debt consolidation loan, and that’s the interest rate.
I’m paying about 9.1% interest rate on the debt consolidation loan. That’s higher than I like and probably higher than I should be getting, but I’m okay with it.
I could have agonized for months, researching for the perfect debt consolidation loan…all the while continuing to hemorrhage (bleed excessively) cash every month on my credit card debt. Instead, I chose action. I did some research and then quickly acted on it.
The interest rate was quoted at 9.125%, but I got a small discount of 0.25% when I signed up to autopay the loan payments each month, bringing the rate down to 8.875% overall.
As promised, here are the numbers on my debt consolidation loan through a company called SoFi:
Loan amount: $40,000
Interest Rate: 8.875%
Monthly Payment: $647.07
The loan from SoFi was the best rate I found in my research. They seem focused on mostly student loan debt, but they offer all kinds of other similar financial loans and various terms. They were one of the few companies that offered fixed rate and variable rate loans. They also offered various repayment terms, allowing me to select 7-years for payback. I plan to repay the loan much faster, but the longer term gave me the lowest monthly payment, which is what I want right now.
If you are interested in a debt consolidation loan, I recommend you check out SoFi. Use one of these referral links for a bonus:
The five credit cards that I paid off were really dragging me down. I’m happy to have them paid off. Here are the numbers on the credit cards:
Credit Card #1
Balance = $4,000
Interest Rate = 14.2%
Minimum Monthly Payment = $40
Credit Card #2
Balance = $7,121
Interest Rate = 16%
Minimum Monthly Payment = $135
Credit Card #3
Balance = $11,608
Interest Rate = 15.2%
Minimum Monthly Payment = $225
Credit Card #4
Balance = $10,915
Interest Rate = 13.3%
Minimum Monthly Payment = $229
Credit Card #5
Balance = $6,106
Interest Rate = 13%
Minimum Monthly Payment = $299
Total for 5 Cards
Balance = $39.750
Interest Rate = About 14%
Minimum Monthly Payment = $928
Savings per Month = $281
As I mentioned, debt consolidation loans are not for everyone. But for me, I saw the benefit and jumped when I found a deal that worked for me. It would have taken me almost 4 years to pay off the five cards listed above, even using the debt avalanche method. But now I get an instant monthly savings of $281, and that’s a significant amount in my current financial state.
My plan is to pay off the debt consolidation loan from SoFi well before I reach the full 7-year term. If things go the right way for me, I hope to have it paid off before I reach 5 years on it. But only time will tell.
If you are considering a similar path, do your research and take a look at SoFi.