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


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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Unconventional Parenting: Why We Let Our Children Curse

"Sh*t!" my daughter exclaimed as she dropped her iPad to the floor. A little bit of context; my daughter Victoria absolutely loves her iPad. And as I watched her bemoan the possible destruction of her favorite device, I thought to myself, "If I were in her position, I'd probably say the exact same thing."

In the Rastegar family, a word is only a bad word if used improperly. This is a concept that has almost become a family motto. Because in our household, we do things a little differently. To put it frankly, our practices are a little unconventional. Completely safe, one hundred percent responsible- but sure, a little unconventional.

And that's because my husband Ari and I have always felt akin in one major life philosophy; we want to live our lives our way. We have dedicated ourselves to a lifetime of questioning the world around us. And it's that philosophy that has led us to some unbelievable discoveries, especially when it comes to parenting.

Ari was an English major. And if there's one thing that can be said about English majors, it's that they can be big-time sticklers for the rules. But Ari also thinks outside of the box. And here's where these two characteristics meet. Ari was always allowed to curse as a child, but only if the word fit an appropriate and relevant context. This idea came from Ari's father (his mother would have never taken to this concept), and I think this strange practice really molded him into the person he is today.

But it wasn't long after we met that I discovered this fun piece of Ari Rastegar history, and I got to drop a pretty awesome truth bomb on Ari. My parents let me do the same exact thing…

Not only was I allowed to curse as a child, but I was also given a fair amount of freedom to do as I wanted. And the results of this may surprise you. You see, despite the lack of heavy regulating and disciplining from my parents, I was the model child. Straight A's, always came home for curfew, really never got into any significant trouble- that was me. Not trying to toot my own horn here, but it's important for the argument. And don't get the wrong impression, it's not like I walked around cursing like a sailor.

Perhaps I was allowed to curse whenever I wanted, but that didn't mean I did.

And this is where we get to the amazing power of this parenting philosophy. In my experience, by allowing my own children to curse, I have found that their ability to self-regulate has developed in an outstanding fashion. Over the past few years, Victoria and Kingston have built an unbelievable amount of discipline. And that's because our decision to allow them to curse does not come without significant ground rules. Cursing must occur under a precise and suitable context, it must be done around appropriate company, and the privilege cannot be overused. By following these guidelines, Victoria and Kingston are cultivating an understanding of moderation, and at a very early age are building a social awareness about when and where certain types of language are appropriate. And ultimately, Victoria and Kingston are displaying the same phenomenon present during my childhood. Their actual instances of cursing are extremely low.

And beneath this parenting strategy is a deeper philosophy. Ari and I first and foremost look at parenting as educators. It is not our job to dictate who our children will be, how they shall behave, and what their future should look like.

We are not dictators; we are not imposing our will on them. They are autonomous beings. Their future is in their hands, and theirs alone.

Rather, we view it as our mission to show our children what the many possibilities of the world are and prepare them for the litany of experiences and challenges they will face as they develop into adulthood. Now, when Victoria and Kingston come across any roadblocks, they have not only the tools but the confidence to handle these tensions with pride, independence, and knowledge.

And we have found that cursing is an amazing place to begin this relationship as educators. By allowing our children to curse, and gently guiding them towards the appropriate use of this privilege, we are setting a groundwork of communication that will eventually pay dividends as our children grow curious of less benign temptations; sex, drugs, alcohol. There is no fear, no need to slink behind our backs, but rather an open door where any and all communication is rewarded with gentle attention and helpful wisdom.

The home is a sacred place, and honesty and communication must be its foundation. Children often lack an ability to communicate their exact feelings. Whether out of discomfort, fear, or the emotional messiness of adolescence, children can often be less than transparent. Building a place of refuge where our children feel safe enough to disclose their innermost feelings and troubles is, therefore, an utmost priority in shepherding their future. Ari and I have come across instances where our children may have been less than truthful with a teacher, or authority figure simply because they did not feel comfortable disclosing what was really going on. But with us, they know that honesty is not only appreciated but rewarded and incentivized. This allows us to protect them at every turn, guard them against destructive situations, and help guide and problem solve, fully equipped with the facts of their situation.

And as crazy as it all sounds- I really believe in my heart that the catalogue of positive outcomes described above truly does stem from our decision to allow Victoria and Kingston to curse freely.

I know this won't sit well with every parent out there. And like so many things in life, I don't advocate this approach for all situations. In our context, this decision has more than paid itself off. In another, it may exacerbate pre-existing challenges and prove to be only a detriment to your own family's goals.

As the leader of your household, this is something that you and you alone must decide upon with intentionality and wisdom.

Ultimately, Ari and I want to be the kind of people our children genuinely want to be around. Were we not their parents, I would hope that Victoria and Kingston would organically find us interesting, warm, kind, funny, all the things we aspire to be for them each and every day.

We've let our children fly free, and fly they have. They are amazing people. One day, when they leave the confines of our home, they will become amazing adults. And hopefully, some of the little life lessons and eccentric parenting practices we imparted upon them will serve as a support for their future happiness and success.