September 21st, 2012
Briana’s Debt Consolidation Story
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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.
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