Summary

A person shares their journey of accumulating and addressing significant credit card debt, ultimately seeking a debt consolidation loan to manage and pay off their obligations.

Abstract

The narrative details the personal experience of someone who accumulated substantial debt through the use of multiple credit cards, which was exacerbated by necessary large expenses as a migrant and the accumulation of smaller purchases. The individual reached a turning point upon realizing the growing burden of minimum payments and the impact on their credit score, leading to a shift in spending habits to cash-only transactions. Despite initial skepticism, the person considered a balance transfer and a debt consolidation loan offered by their bank, with the latter eventually being pursued after cryptocurrency investments, initially intended for debt repayment, became volatile. With guidance from a mentor and new terms from the bank, including the closure of non-bank credit cards and a reduced credit card limit, the individual is hopeful for a positive outcome to finally escape the cycle of debt.

Opinions

The author views debt as a form of slavery, quoting Ralph Waldo Emerson.
There is a sense of frustration and anxiety associated with rising minimum payments and a declining credit score.
The author expresses regret for falling into the trap of credit card offers and acknowledges the need for self-discipline in spending.
The individual is initially skeptical of bank offers, such as balance transfers and debt consolidation loans, due to unfavorable terms.
The author shows a proactive approach to debt repayment by using cash for purchases and paying more than the minimum balance on credit cards.
There is an optimistic outlook on the debt consolidation loan as a means to manage debt more effectively, despite the need to adhere to strict conditions set by the bank.
The author values the support and advice of a mentor in making financial decisions.
The individual is determined to avoid past financial mistakes, indicating a strong commitment to becoming debt-free.

This Feels Really Awesome That I Am Getting Rid of All This Debt Finally

A man in debt is so far a slave.

How did I get into debt?

My first credit card came from my bank. As I opened my checking account, they offered me a credit card. From time to time, they would increase my limit. When I had a huge expense, I would charge that expense to the card. Eventually, there were too many repeat expenses that my credit utilization ratio shot up.

Some expenses were huge and unavoidable as a migrant; accommodation, international flights home to be with family and recertification courses. Others were less exorbitant but eventually added up.

My second credit card came when I went grocery shopping. For a long time, I had refused those hawks that jump on you at checkouts. But one day, I fell into their trap and got a card. With each shopping trip, I would get a credit limit increase. I just knew that one day, the bank had offered me the maximum limit on my card and my utilization ratio was crazy.

When reality hit.

I noticed increasingly that my monthly minimum payments went up. My credit score stopped looking sexy. I suddenly had this anxiety and sadness about credit scores and debt profiles. I decided I had no choice but to stop using my cards unnecessarily. I became a cash queen. If I didn’t have the money, then the shopping could wait. I had to stop digging this bloody hole.

Is there light at the end of the tunnel?

Every week, my bank sends me marketing emails offering me one service or the other. I rarely pay too much attention. One day I did.

That email was about doing a balance transfer from my other credit cards to my bank credit card. I read the fine print, did the maths, and realized what they were offering was not workable. To be sure, I called the bank. I was right. My other credit card carried a higher balance than what my bank’s credit limit was.

Soon after, the next email came. This time, they offered me a debt consolidation loan. I ignored it. My crypto investments were doing well. I intended to use that to pay off my debt.

I had to go into the bank to do a transaction. The lady who offered me service reminded me I had an offer on a debt consolidation loan that was valid for 3 months. I told her I wasn’t interested. I still had crypto. Eventually, that offer expired.

Six months later, I got the same offer again. I felt a bit more disposed. By then, the crypto had started its merry-go-round. I went into the bank, asked a few more questions, and did the application. In a week, I got feedback that the application did not go through. The lady called me aside and told me my application would stand a chance with a guarantor. I felt that was too much trouble.

One day, I was chatting with my mentor. His favorite topic is making money. Somehow, we stumbled on that loan application. He said: “I could be your guarantor. Why didn’t you ask me?” “I thought it was too much trouble.” “See if the application is still valid”.

So at the next available opportunity, I went to the bank. They stated that the previous application was closed, and I needed to make a new one. This time around, they offered me a loan package that did not need a guarantor. The conditions were different.

First, I needed to close all my non-bank credit cards. I had two. I had fully paid off one, and the other carried a huge balance. Second, they were going to reduce my bank credit card limit by half. The bank official said that presenting the conditions to the credit department would most likely get me the loan.

The bank would then use the loan to pay off all my credit card debts while every month, I’ll pay them a fixed amount at a lower interest rate compared to what I was currently paying to all my credit card companies.

I was totally game. What I had been trying so hard to achieve was now within reach. For a long time, I had been using my credit card sparingly and using cash happily. I more or less scrutinized every shopping trip. It had to be essential or it would not happen.

Anytime the credit card company sent me a bill, I always paid more than the minimum balance. My effort seemed negligible in the face of those interest rates and outstanding balances.

So you can imagine how happy I was when the bank official offered me that deal. Suddenly, there was light at the end of the tunnel. Now my anxiety could reduce. As for the restrictions they threw at me, I welcomed them all cos these were measures I was already trying on my own with marginal results.

Within this week, I’ll get definite feedback. Depending on how things go, I have a Plan B and a Plan C. I can tell you for free that none of them involves getting back into this shit I am trying to get out of.

Thanks, Jason Edmunds.

A man in debt is so far a slave.- Ralph Waldo Emerson.

June Update: The bank turned down the application. Last weekend, I went to the bank and asked them to transfer everything in my savings to my credit card account. Logic: The interest on that was far negligible compared to the interest I was paying on the credit cards.

Now my financial belt is even tighter. It’s always been basic living for me, but things are about to get even more basic.