A Personal Loan Can Save Your Finances

If you are one of many consumers who have surpassed their spending limit and are feeling the pressure of debt collectors or have suffered the closing of their credit cards, we can give you some interesting hints as to what can be done in these circumstances. It is true that it takes some patient negotiation and effort on your part, but it is absolutely repairable.

If You Are A Tenant
Not being a homeowner makes things a little harder for you, but there is always a way. The possibility you have in this case is an unsecured personal loan. There are loan brokers or lending companies that specialize in unsecured personal loans for people with bad credit. We must admit that by now, your credit report will have begun to show each payment that you missed or paid late.

As a first step, you will have to know exactly how much you owe, how much could be written off for a prompt payment and therefore, how much the loan will be for.

Conditions
Unfortunately you are learning the hard way, so this will surely be a one-time-lesson that should get you on track towards a better control of your spending. It is important to give these matters a high priority and look around for the mildest conditions available for your situation. A difference of one per cent or even half a percentage point in the interest rate will mean a lot to you, since you are counting every cent and distributing your scarce cash as best you can.

The Length Of The Loan
This factor is also very important since one year more in length will mean a bunch of dollars more in your hand every month. If things change while the loan is in force, you can always refinance for a shorter period and get over with it faster. Remember that you are trying to get out of bad credit, so it is very important that your payments, whatever they are for, are never late and if possible a day or two in advance.

Getting Prepared
If you feel that you are not decisive enough, get someone to help you out, with an opinion or even going with you to the interview with the loan agent. Doing your "homework" means re-editing those old school techniques of taking note of what is being offered, asking questions about what you do not know, not giving a definite answer yet and studying the situation at home, if possible with a copy of the contract that you will eventually be signing.

Good Company
The ideal person to study this up with is your spouse, since you are both on the same boat and have to bail out together. However, it is important not to be alone and since a financial advisor also costs money, a good, knowledgeable friend or co-worker will do.

A loan is not just "free" at the moment of closing: It has some fees that have to be paid. Maybe your lender will agree to spread them over your monthly payments, but some of them will have to be paid at closing time.

Things Begin To Happen
Once you have defined who will grant you the loan, start to distribute the payments and stick to your decisions. You are in the process of replacing many debts for just one, with a more manageable amount and the certainty that you are running out of the ditch fast. This behavior will shortly improve your credit rating and will prepare the way for a much more interesting future.

The pain of debt

Not long ago, a friend of mine came to see me with a problem. He had just recently broke with his girlfriend and had financial difficulties. He was not looking for money, not exactly. He and his ex-girlfriend had taken a 100% mortgage loans to buy their homes. As they were no longer together, it had been decided that he would take care of the house and reimbursements that went with it. The problem is the mortgage was both their name and based on both their income.

My friend went to get a mortgage changed into his name, but he ran into a brick wall. The bank is not prepared to change the mortgage on his behalf, because he was not prepared to take the risk of my friend. You see my friend also has a substantial amount of personal debt, debt credit card, overdraft and some outstanding student loans.

So, if that was not bad enough that my friend, broken relationship, he also looked like he would lose his house. Now, what did he want from me? Has he come looking for advice on how to repay its debts and stabilize its financial situation? Was he looking for motivation in its struggle with its debts? No, nothing of the sort. My friend was short on options. He was looking for someone to go guarantor of the mortgage. This would mean that the person who signed as a guarantor of the mortgage would be liable for the mortgage repayments in the event that my friend could not make mortgage payments.

To be honest, I struggled for a long time with this situation. What do I do? I was caught between the desire to help a friend in need and do not want to put myself in a position that could affect my future. Imagine the scenario - I will guarantee the mortgage for my friend, my friend now manages to make mortgage payments for the six-month period. Okay, so far so good - seems to be working well ok, and my position, a good friend is ensured. Now imagine that my friend is dismissed or its debts continue to grow and are too much for him to handle? What then? The problem is that if my friend can not make mortgage payments and then it falls to me to make them for him. I myself have the debt burden, and I sincerely doubt that I could take on someone else, the mortgage on the top of the repayment of loans that I will make myself every month.

As you can see, it was difficult position to be in. I was angry at my friend, to put myself in that position and try to take advantage of our friendship so that I can solve its problems. I was not happy at all. I was not happy with the way it made me feel and how it has infected our friendship. You can see that this is the thing about debt in all its ugly forms. If you are in debt and are struggling to cope with your debts then every aspect of your life is seen through the glasses of debt. Every decision you make is clouded by debt. You are no longer willing to take risks like finding and start a new and better jobs.

It is situations like this that made me crazy enough to launch this website. I get really angry when I see people affected by the debt. They sleep walk right into a mountain of debt and wake up one day we all want a bad dream. Some will end up depressed and on anti-depressants. Couples with debt problems begin to argue over money. The debt has made them fearful of losing what they have material things. Little realizing that if they continue the way they are, they are in a vicious cycle of spending in order to maintain a certain lifestyle and the use of debt to fund it. I have heard stories of couples remain together (although they hated) simply because they could not afford to take the hit negative equity on their homes. You see debt as it is oppressive - their enslavement.

Going back to the situation I had with my friend. It became desperate that the bank was looking for a guarantor and his ex-girlfriend wanted his name off the mortgage quickly. So I took the middle ground - I really wanted to help this guy, after all he is a friend and what should I use as a friend, if I could not help him in his hour of need. On the other hand, I did not want to be pulled down by his error - if things are a little worse for him, I would be dragged into the black hole of debt. Not a place where I wanted to go. So here is what I proposed to him and how I offered him.

"I will go as guarantor of your mortgage for the period of six months, if you meet the following criteria.

1. Get a reality check - I want you to calculate exactly how much you owe and to whom you owe. Next, I want you to calculate exactly how much you are willing to repay each month.
2. Calculate the absolute minimum that we can live with realism of each month - to cover only the basics, mortgages, food, transportation and medical insurance.
3. Take a look around your home and life and sell everything that you do not need - everything. Use this money to pay off your debt and credit card.
4. Once the first three stages have been completed, I want you to put aside an additional 5% of your net income each month, and add that amount to the monthly payments that you make on your small loan. Once you have repaid the loan, you take the amount to be repaid on the loan were as additional 5% and add it to the next small loan. Continue in this manner.
5. Cut all your credit cards and operate only with debit cards or cash.
6. Create a day / week / month budget. "
   

I told my friend that I would go guarantor for six months to give him breathing space but I wanted to change their buying habits. After the six months are up, I extend for one year if it meets the criteria I have set out above.

To the casual observer the conditions described above may seem a bit extreme - some may argue that I should have just went ahead and signed the mortgage and to hell with the consequences. He is a friend goddamn it! My argument is this - this kind of attitude that got us into debt, first, and I will be damned if I go back there. I had too many sleepless nights for me to return to the drowning in debt.

So this is how it appeared. My friend told me to be unreasonable. I explained to him in detail the reasons why I wanted him to meet the criteria. It is for his own good and I had his best interests at heart. He too did not take kindly to my offer of assistance to the condition. He got very offended. He said that I was treated as a child and, in some ways, he was right. I was trying to control their spending behavior, but only because I could see exactly where he would face financial difficulties.

I tried to stay calm and kept repeating my reasons, but as I said earlier, when people are in a lot of financial difficulties and the bank called, it is difficult for them ' be logical. It has become a bit ridiculous, and my friend became very upset. He did not see why I was so stubborn. I stress that I felt it was unfair for him to use emotional blackmail on me so I can just click my fingers and its problems would be solved. Well, at least until the next debt resolved threat!

The conversation continued in this manner for some time before my friend got up and just left angry. We have not talked for weeks. I have sent an e-mail to see what he was up and he called me. We talked for a moment and he apologised for storming off. I asked about the mortgage, and he told me that his brother-in-law had gone guarantor.

We left at about this. We met and talked but since our friendship is probably damaged beyond repair.

A part of me wonders if the right thing to do was nothing - to catch some wishy washy excuse for why I could not go and leave guarantor to its own devices. I do not know what would have happened, but to be honest, I think the best thing that could have happened to him was losing his house - or come close to losing he has changed his ways. Now, before you start typing email of bile for me let me explain. I wanted to achieve my friend how debt can be dangerous if they are used without thinking. I could see his "I want everything and I want it now" lifestyle that has been called into using more deeply into debt. "I wanted to help them achieve that, but he did not want to listen, and certainly not for me. Who was I to tell him he had a problem? If the sheriff came calling to take his case that would not have been enough?

Probably not.