About Me 0047: Making Money

But borrow that same amount on a credit card, and you're likely to pay a much higher interest rate. And on top of that, odds are even better that, at some point, as you pay down the card, human nature will take over, you'll eye some amazing gadget in a store and you'll whip out your credit card. The $10,000 that had shrunk to $8,000 is now back up to $9,000. And you're going to stay in debt all that much longer.

So is it a good idea to take out a personal loan instead of, say, charging your purchase on a credit card, taking out a home equity loan, taking out a second mortgage or asking your bank for a line of credit? Here's what a few experts had to say.

"This is a terrific idea on paper," says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling. But she cautions that if you already have credit cards, going for a personal loan can be problematic. "The consumer, regardless of how well-meaning he is, will typically run up his charge cards and, at the end of a year, owe the bank and the credit cards. So often, things that work well mathematically [on paper] don't smoothly translate into practice."

Theodore W. Connolly, a bankruptcy lawyer and co-author of the new book, The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems, says, hands down, "Personal loans are a much better choice." Why? "Basically, I see credit cards designed so you don't rush to pay them back, whereas personal loans are designed for the regular repayment."

The only caveat, of course, is that if you're going to take out a personal loan, you'd better have a really good reason to do so. After all, you're about to commit yourself to going into debt for a number of years, so hopefully you can say "yes" to the critical question: Will it be worth it to be in debt for three or four years because of this loan?

Regular readers of my WalletPop posts know that I have a rich history of being cash poor, and about 10 years ago, I took out two personal loans from Wells Fargo within a few months of each other. They were around $1,500 each and designed to be paid off in about three years. When I took out the loans, I knew they were predatory loans aimed at people who didn't mind or didn't care that the interest rate was high. But I was desperate. I accepted them.

As lousy as these loans were, however, they weren't credit cards. I made my monthly payments, struggling some months to do so, and three long years later, the loans were paid off. Compared to many of the alternatives -- and if you truly believe you can make the payments -- I'd have to say taking out a personal loan could work out well for some people. Connolly thinks so, too.

And Cunningham is for it, but only if the borrower is extremely disciplined and not trying to be too clever about how he or she is managing their debt. "Consumers need to remember that moving debt around is not paying debt off," says Cunningham. "So often people think they're being savvy money managers when, in fact, they're not better off this year than last."

Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
bench craft company rip off

bench craft company rip off

But borrow that same amount on a credit card, and you're likely to pay a much higher interest rate. And on top of that, odds are even better that, at some point, as you pay down the card, human nature will take over, you'll eye some amazing gadget in a store and you'll whip out your credit card. The $10,000 that had shrunk to $8,000 is now back up to $9,000. And you're going to stay in debt all that much longer.

So is it a good idea to take out a personal loan instead of, say, charging your purchase on a credit card, taking out a home equity loan, taking out a second mortgage or asking your bank for a line of credit? Here's what a few experts had to say.

"This is a terrific idea on paper," says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling. But she cautions that if you already have credit cards, going for a personal loan can be problematic. "The consumer, regardless of how well-meaning he is, will typically run up his charge cards and, at the end of a year, owe the bank and the credit cards. So often, things that work well mathematically [on paper] don't smoothly translate into practice."

Theodore W. Connolly, a bankruptcy lawyer and co-author of the new book, The Road Out of Debt: Bankruptcy and Other Solutions to Your Financial Problems, says, hands down, "Personal loans are a much better choice." Why? "Basically, I see credit cards designed so you don't rush to pay them back, whereas personal loans are designed for the regular repayment."

The only caveat, of course, is that if you're going to take out a personal loan, you'd better have a really good reason to do so. After all, you're about to commit yourself to going into debt for a number of years, so hopefully you can say "yes" to the critical question: Will it be worth it to be in debt for three or four years because of this loan?

Regular readers of my WalletPop posts know that I have a rich history of being cash poor, and about 10 years ago, I took out two personal loans from Wells Fargo within a few months of each other. They were around $1,500 each and designed to be paid off in about three years. When I took out the loans, I knew they were predatory loans aimed at people who didn't mind or didn't care that the interest rate was high. But I was desperate. I accepted them.

As lousy as these loans were, however, they weren't credit cards. I made my monthly payments, struggling some months to do so, and three long years later, the loans were paid off. Compared to many of the alternatives -- and if you truly believe you can make the payments -- I'd have to say taking out a personal loan could work out well for some people. Connolly thinks so, too.

And Cunningham is for it, but only if the borrower is extremely disciplined and not trying to be too clever about how he or she is managing their debt. "Consumers need to remember that moving debt around is not paying debt off," says Cunningham. "So often people think they're being savvy money managers when, in fact, they're not better off this year than last."

Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
bench craft company rip off

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Friday, November 19, 2010

Making Money

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