When my kids were seniors (yes, they’re twins), I wanted to make it a great year. We had an amazing Christmas, and I decided to take them on spring break…just the three of us. They were going out of state for college, and I hadn’t seen their schools. So we flew down, rented a convertible, and had a vacation that we will all remember for a long time. I tried to keep some costs down. We stayed with my brother part of the time, and we tried to keep the food costs down. But the reality is that flights, hotel (for part of the time), and renting a car—a convertible no less—really added up.
So having an expensive Christmas, expensive vacation, volleyball expenses, and senior/graduation expenses all hitting around the same time was too much for an already tight budget. I found myself in debt. Nearly $10,000 to be exact.
My first step was to panic. Then, I realized I needed a game plan. I had always managed to pay off my credit cards, and I tried to capitalize on the points they provided. But even tapping out my savings account would not enable me to pay off a nearly $10,000 bill. For a couple of months, I tried to pay extra to bring the principle down. But I owed so much, I was hardly making a dent. It was like spitting in the ocean.
I decided I needed to get more aggressive. And I decided I needed a more clear beginning and ending of the payments. So I did some research and found a couple of online companies that give personal loans for this very reason. Two that stood out were SoFi and Lending Club. Because I had excellent credit, I knew I could get a loan at either. I decided to go with SoFi, which has a really solid reputation, and my understanding is that it can be a little more challenging to get a loan with.
So I spent some time tracking down all the paperwork: w2s, account information, etc. I completed everything required (all online), and poof, I sent it off. It was a really good online experience. They kept me updated throughout the process, which I think took a few days to get approved and about a week or less to get the funds. The timing for all of this may vary.
I paid off my credit card, and in three years (or less) I will have my personal loan with SoFi paid off. I learned from this, and I’m making sure I don’t repeat the mistakes I clearly made that got me here.
So why did I choose a personal loan over just paying off the credit card? You could argue that I could have just done the same thing with the credit card.
- I cut my interest-rate down from 15.5% with the credit card to 6.5% with the personal loan.
- The SoFi rate was fixed for the life of the loan.
- The credit card interest accrued daily verses the annual rate with the personal loan.
- It was a large debt. So the above differences are even more pronounced.
- I felt like a had more control and clarity with the personal loan.
I’m now a year into my loan with SoFi. And I love them. They’ve been great to work with. I can access my account at any time. I have automatic payments set up. I can increase them to pay it off more quickly, and I can make additional payments whenever I want.