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Reading The Fine Print: The Pros And Cons Of A Personal Loan

Finance

Many Americans are in a battle with their credit card debt and are stuck in a vicious cycle of seemingly never-ending payments. Holding large credit card balances, in which you may be struggling to keep up with, not only impacts your cash flow, credit score and overall financial health, it also can affect your physical well-being if it is causing you stress. While it may seem impossible to dig yourself out of all of this debt, there are ways you can conquer and win the credit card debt battle.


Taking out a personal loan can be a good way to pay off your credit card debt, but you should also be aware of the pitfalls. Here is some insight into understanding what a personal loan is, as well as the pros and cons that come along with it.

What Does it Mean When You Pay Off Credit Card Debt With a Personal Loan:

Paying off credit card debt with a personal loan typically falls under the category of a “credit card consolidation loan." Credit card consolidation loans are term loans in which the borrower will have a repayment plan, and the debt will be paid within a definitive time frame with a set interest rate. Having a set interest rate and time frame can be helpful in keeping track of how much interest you are actually paying for the duration of the loan as opposed to carrying credit card balances. Carrying a credit card balance each month could cost you more in interest than you may have anticipated if you only pay the minimum amount required.

"Consolidating your high-interest credit cards into a personal loan with a lower interest rate could save you a significant amount of money in the long run"

The Pros in Paying Off Credit Card Debt With a Personal Loan:
Obtain a Lower Interest Rate:

While it's not guaranteed, you may be able to get a lower interest rate than you currently have on your credit cards. Consolidating your high-interest credit cards into a personal loan with a lower interest rate could save you a significant amount of money in the long run. Having a fixed interest rate for the duration of the loan will keep your monthly payments the same each month and will help you better budget and keep track of you expenses each month.

One Single Monthly Payment

If you hold numerous credit cards with high balances, consolidating them all into one personal loan will give you a single balance under one interest rate. Not only does this make managing your credit card debt simple, but it can also help you keep better track of your finances as well as making on-time payments. Having a single monthly payment may be beneficial to those who may be prone to financial procrastination and have a hard time managing their finances. It could also be a good opportunity to “turn over a new leaf" and embrace financial literacy as well as embark on a journey to a debt-free life.

Quicker pay-off time

Unlike credit cards, a personal loan can be paid off in a shorter amount of time. Credit cards do not have a set repayment period. When only paying the minimum amount required on credit cards, you could be facing decades of payments, leaving you with double or even triple the original balance. Try comparing how long it will take you to pay off a personal loan as opposed to sticking to making monthly minimum payments. Making a comparison will be easy to do because every credit card company is required by the Credit Card Accountability, Responsibility, and Disclosure Act (CARD) to have an explanation on statements as to how long it will take you to pay off the credit card debt if you just make the minimum payments. Having this information may not only be an eye-opener but can help you make your decision on opting for a personal loan.

The Cons of paying off credit card debt with a personal loan:
Interest Rate Could Be Higher

Typically the interest rates on personal loans are lower than the interest rates associated with credit cards. However, the interest rate you are given will depend on whether or not you have good credit. If your credit is less than desirable, then you may not getter a better interest rate deal. Even those who are considered to have good credit may not get an interest rate that would make sense to opt for a consolidation loan. It's always important to do your homework and make comparisons to decide what will work best for your individual financial situation.

Monthly Payment May Not Work Within Your Budget

You may very well be able to obtain a personal loan to pay off your credit cards. However, you have to make sure that the monthly amount fits within your budget. If you don't think you can swing the monthly payment on your current budget, see where you can make cuts to your expenses that will work and make sense.

If the payments are not affordable, then you may have to seek other options in paying off your credit card debt. For example, you may have to take on a side-job to bring in more income to pay more than your minimum balance or cut back on expenses such as dining out and cable bills.

"If your credit is less than desirable, then you may not getter a better interest rate deal. Even those who are considered to have good credit may not get an interest rate that would make sense to opt for a consolidation loan"

Fees May Be Involved

Before signing on the dotted line, make sure you read the fine print. Some personal loans may have origination fees that may add a substantial amount to the loan. Make sure that the fees do not outweigh the benefit of consolidating your credit card balances.

If you decide to opt for a personal loan to pay off your credit cards, it's extremely important to understand how you got into credit card debt in the first place. Get to the root of the problem, so it doesn't happen again. If your credit card debt was due to impulse buying and poor spending habits and you don't take action to correct the behavior, then taking out a personal loan to pay off your credit cards will only be a temporary fix. Create a budget to keep track of how much you have coming in vs. how much is going out for expenses. Whether you have credit card debt or not, Budgeting is a great tool for everyone, and by utilizing a budget, you will be on your way to a debt-free future!

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Career

2020 is Around the Corner: Here's How To Design Your Next Decade

Personally, I am over the top excited that we are on the cusp of turning the page on not only a new year but also on a new 10-year window of opportunities and possibilities!

You may be thinking, whoa…I am just embracing the fall season…yikes… it is tough to think about a new decade!


Yet it is this groundwork, this forward thought that you put in place TODAY that will propel you and lead you into greatness in 2020 and beyond. Designing a new decade rests in your ability to vision, in your willingness to be curious, in your awareness of where you are now and what you most want to curate. Essentially, curating what's next is about tapping into today with confidence, conviction, and decision. Leading YOU starts now. This is your new next. It is your choice.

Sometimes to get to that 'next', you need to take a step back to reflect. Please pardon my asking you to spend time in yesterday. Those who know me personally, know that I created and continue to grow my business based on enabling the present moment as a springboard for living your legacy. So, indulge me here! True, I am asking you to peek into the past, yet it is only in order for you to bring the essence of that past forward into this moment called NOW.

One of the best ways to tap into what's next is to clarify what drives you. To design a new decade, ask yourself this question about the past ten years:

What worked? What were my successes?

Make a list of your achievements big and small. Don't type them, but rather use ink and paper and sit with and savor them. Move your thoughts and your successes from your head, to your heart, to your pen, to the paper. Remember that on the flip side of goals not attained and New Year's resolutions abandoned, there was more than likely some traction and action that moved you forward, even if the end result was not what you expected. Once you have a full list of a decade's worth of personal and professional accomplishments, think about how this makes you feel. Do you remember celebrating all of them? My guess is no. So, celebrate them now. Give them new life by validating them. Circle the successes that resonate with you most right now. Where can you lean into those accomplishments as you power into the decade ahead?

Now comes a tougher question, one that I used myself in my own mid-life reinvention and a question I adore because in a moment's time it provides you with a quick reconnect to your unique inner voice.

If it were 10 years ago and nothing were standing in your way, no fear or excuses to contend with…what would you do?

Don't overthink it. The brilliance of this question is that it refocuses purpose. Whatever first came to mind when you answered this for yourself is at its core a powerful insight into defining and redefining the FUTURE decade. Bring your answer into the light of today and what small piece of it is actionable NOW? Where is this resonating and aligning with a 2019 version of yourself?

Then, based on your success list and your answer to the above question, what is your 2020 vision for your business and for the business of YOU?

Designing a new decade begins as a collection of 3,650 opportunities. 3,650 blank slates of new days ahead in which to pivot and propel yourself forward. Every single one of those days is a window into your legacy. An invitation to be, create, explore, and chip away at this thing we call life. One 24-hour segment at a time.

While you have a decade ahead to work on design improvements, you have the ability to begin manifesting this project of YOU Version 2020 right NOW. Based on exploring the exercises in this post, begin executing your vision. Ask questions. Be present. Let go of 2019 and the past 10 years so that you can embrace the next 10. Position acceptance and self-trust at the forefront of how you lead you. One choice at a time.

Don't get bogged down in the concept of the next 10 years. Instead position clarity and intention into each new day, starting today. Then chase every one of those intentions with an in-the-moment commitment and solution toward living a legendary life!