I’m taking a lot longer than I had planned to pay off some debts. These debts aren’t mine but I’m trying to be helpful to some friends and loaning them some money. It’s turning around and kicking me in the ass for it. It’s a bad idea to be lending money to people who have low income and can’t afford to make payments in the first place. I didn’t think the load would have been this heavy to take on but I was wrong. I was hoping that they would have given me partial payments to pay for their loans but nothing has gone through yet. The longer it takes for me to pay off these debts, the more it will cost me in the end.
I had to make an appointment with my account manager last week to see about getting a consolidation loan. I wanted to borrow enough money to cover every since credit card that I have. We added up all the credit card bills and estimated that I will need $12,500 to pay for everything.
I put in my application and waited for my account manager to give me a call to let me know if it has been approved or not. I emailed him the remaining documents that he asked for and waiting patiently for his response.
I get a call from him the next day informing me that it might be better if I applied for a line of credit. With a consolidation loan, I would have to cancel all my credit cards. Right now, with my girlfriend overseas, I need to have my credit cards in case of emergencies.
I’ll be borrowing at a rate of 10.75% which means that I’ll have to pay back $13,843.75, an extra $1,343.75. I’m getting charged $120 a month for interest charges. Over the course of a year that’s going to cost me $1,440. By taking the line of credit, I’ll be saving a bit of money. It’s not much but every little bit helps.
It is estimated that it will take me about two years to pay off everything. I’m planning on making $500 payments a month to the line of credit. If I have extra money to use, I will put it towards the payment as well. The higher the payments, the faster I will have this paid off. I’m hoping to use my income tax return to help with the payments. If I’m getting back when I think I’m getting back, I’ll be shaving off five months worth of payments.