September 21st, 2012

Briana’s Debt Consolidation Story

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debt consolidation

**Welcome to Self-Improvement Month here on the Credit Karma Blog! Today’s guest post is contributed by Briana.**

I got my first full time job in April 2010 as a Social Media Coordinator. Before that, I had been a broke college student surviving off credit cards, especially after I quit my part-time receptionist job to take care of my mom when she got sick.

When I moved into my own place with my boyfriend (now husband), we were both making good money, but I was just paying the minimums on my cards month to month. It’s not that it wasn’t manageable, but I would’ve preferred to get out of debt sooner than later, and see some sort of light at the end of the tunnel.

So I started checking out my options. I heard of debt consolidation, since I knew a few personal finance bloggers, and did a bit of research. Debt consolidation is when you take out a loan, pay off your other debt, and have one monthly payment to pay off. This is a great option for people who have multiple creditors to pay and too many due dates to juggle. I had a couple options to get a debt consolidation loan, but I tried a relatively new route.

Peer-to-peer lending, abbreviated as P2P lending, is a process where everyday people can contribute to your loan without dealing with a bank. People invest in your loan and when you pay it back, they receive interest. You still have to undergo credit checking, but it was an alternative that appealed to me. I went to LendingClub.com and filled out the form for a $7,000 loan. My loan was to pay off my credit cards and to have enough left over to start my first term of school.

Slowly, but surely, lenders began to fund my loan. Some people contributed $25 while others contributed a couple hundred. During this funding process, I had to confirm my bank account where the money would be deposited, and provide proof of employment, which was easy. A little more than a week later, my loan had been 100% funded and approved!

Debt consolidation helped my credit, because I was able to completely pay off my credit cards without missing any payments, had a lower debt utilization percentage, and had only one payment due date to worry about rather than multiple. There was also a light at the end of the tunnel, as the loan would take 3 years to pay off, and get me out of debt. It was one of the best financial decisions I made.

Briana operates How’s Married Life? She’s a blogger, social media specialist, freelance web consultant and health & wellness student. Find her on Twitter at @howsmarriedlife.

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10 Comments

  1. One of the hardest situations is to experience financial crisis. Many things can be affected such as your investments and properties as well. In this concern, it is best to try debt consolidation to solve your concerns about finances.

    Danica at 12:57 am on October 1, 2012
  2. Thanks for sharing your experience. debt consolidation helps to take bills likeas the household bills or the credit card bills.

    edebt at 4:29 am on January 15, 2013
  3. Stay away from debt consolidation. My sister was in a similar situation and ended up consolidating debt without changing overspending habits and got in worse. In the end the solution was to go to a free debt counselling service (in ireland this is a government run service) and these negotiated repayment terms on all her debts for her, (effectively no new interest will accrue, and she pays off a small amount if her arrears every month).
    This has allowed her to live again, but her credit score is irreparably damaged, and she will continue to repay these debts for 40+ years (You cannot wipe personal debts through bankruptcy in Ireland)

    debt consolidation at 5:44 am on February 1, 2013
  4. Congrats Briana. Always like to read about a happy ending to a frustrating and trying situation, so kudos to you. One of the points I would like to add is that it is always important to try to work with a not for profit agency, as these providers typically receive funding from institutions and organizations, so they are not collecting funds from you and there are no hidden agendas or methods to their madness.

    Eric at 3:37 pm on May 4, 2013
  5. Thank you for the article. As a company that helps people with debt consolidation, it is nice to hear that it has been helping people out. Thank you again.

    800hope at 11:14 am on June 11, 2013
  6. The basic concept behind debt consolidation is that it pulls all your unmanageable loan payments together into a single manageable loan payment.

    steve madden at 5:38 am on March 27, 2014
  7. Does refinancing a 2 month old auto loan from 19% interest to 8% interest hurt or help your credit score?

    Jonathan at 11:03 am on May 8, 2014

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