Debt Consolidation
February 4th, 2009Wierd Al Yankovic – Don’t Download This Song
Last night I’d decided that I’d had enough of single handedly managing all my debts and bills, so this morning I went into my bank and consolodated my debt, with an agressive payment scheme.
Basically I’m NZD$12k behind for various reasons on a number of different things, and I’m paying anywhere up to $1.8k a month, which is making life hard, especially when I have no visibility of where most of the debts are at. The worst part is that there is one debt that varies quite wildly from $170/month to $800/month without warning – a stable $1.8k a month I could probably deal with, but an unstable total that’s all over the place just makes life complex sans reason or sense. With this consolidated loan, I’m paying $1k a month, which will get me even in a year, and I now have a tangible goal that I can check up on and aim for. I’m hoping next month to have some money in from people who are still owing me, and I can flick another $1k onto it. It may seem like a lot to take out of my monthly pay, but all up I’ll have more cash in hand each month, stability will be brilliant for a change, and I may finally be able to restart my savings.
It feels good to have my finances in order for a change, and now I’m inspired to really get on top of things. After this loan is paid for, I plan to attack my Student Loan, which is currently taking about $400 out of my pay. I figure I can change the $1k loan payments to a $600 payment (to top my Student Loan repayments up to $1k, while giving me $400 extra a month to reward myself for a year of knuckling down), and have my Student Loan all paid off within another year.
Look out ladies, I’m ambitious!
February 5th, 2009 at 12:34 am
Of course, provided that you have some self-control, you're better to put the $600 per month in a dedicated savings account gathering interest (3% lol). At the end of the year you'll be able to pay off your loan in one hit, have another $1000 per month, and have $150 (or so) worth of interest to have a night at the pub!
February 12th, 2009 at 11:21 pm
Umm, wtf? I do hope that was in jest, as I have seen far too many kiwi’s believing that sort of nonsense…
@Ra: did you have a look at the different debts that you had before, because quite often the interest rate will vary wildly on them. No point in consolidating debt at a higher interest rate
February 13th, 2009 at 9:25 pm
Good work man!, I’m in a similar boat. You’ve given me hope for Banks once more.
Cheers,
Ants.
February 19th, 2009 at 10:25 am
Thanks for the comments guys.
@Spoon: I’d probably only use a secondary savings account to build up a lump payment w/ interest on a large and long term debt like a car or house. For a one year pay-off like this consolidated loan, probably not. I’m not that dedicated
The student loan I expect would be the same deal as this consoldated loan – one year or so to pay it off outright.
@Mr.Sparkle-san
Yup, I shopped around and while I would have got lower interest rates at Kiwibank, it would have meant switching to Mastercard, which wasn’t too appealing. I stuck with National (who dropped the rate slightly and the loan setup fee) and dropped interest rates across the board by at least 4% (excluding my low-interest Visa, where I dropped by about 0.75%)
Given that the plan is to have this paid in one year, I actually wouldn’t mind paying a percent or two extra. The main thing for me was finally being able to see in one place where I’m at and how far I have to go, so now there’s a real sense of having a goal to aim for
@Ant
cheers dude. I took advantage of the bank deals they were offering at the time. If you’ve got a credit card debt, shop around for a balance transfer – kiwibank were offering 4.99% for the first 6 months for example. Of course this turned out to be a bit more than a balance transfer