For us to have taken a mortgage for the “relatively” small amount we needed, vs. the worth of our house, would have cost us MORE. We would have had to pay a penalty to “pay off” a ridiculously low mortgage in advance of 10 years. The loan will be paid off in 18 months or less! (probably MUCH less, as we are saddled with no credit card debt).
It IS important, however, to keep a small monthly balance on your credit cards – AND PAY IT OFF ON TIME. This is another way to increase your credit rating. There is nothing worse to a credit card company than to see a constant balance of $0.00. They much prefer people servicing a minimum payment (and, if possible, interest!) monthly.
Unless catastraphe strikes, at our age, we have vowed to NEVER pay another penny of interest to a credit card company!
(Note: this is for our personal finances; due to the nature of our side-business, it is likely that there will always be some credit card debt, until we hit our 3-year goal, as we continue to amass inventory- we’re almost there!)

Rita

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Since you don’t have a mortgage (and if you have a house or condo), could you have attained a mortgage against the house to pay off the credit card debt instead of a personal loan? In that way you’re now getting an even lower interest rate, lower monthly payment, and the interest is now all tax deductible?

For anyone curious, like Rita said, banks want their money and they will work with people even with bad credit. What they really want to see is if they modify the payment/interest rate, can you still afford it. They likely will ask 20 questions about where you spend money, what your cost of living is, and how much you make and then structure a payment plan that will work for you.

This is great news! Maintaining a credit score over 700 in these days is critical to borrowing cash at a MUCH lower rate than borrowing off of a credit card. I tried to get that point across to a woman recently, and I hope she listened: putting yourself in MORE credit card debt these days is the financial “kiss of death.”
Last week, my husband and I tallied up our credit card debt, walked into OUR “personal” bank, and asked for a small laon – to the penny- to stop paying rates over 20% to the credit cards. It helped that we have no mortgage – I will admit that. But even WITH a mortgage, the banks want their money, so they’re much more likely to loan money to a good credit risk so that THEY get their monthly payments, without worrying that people are paying-off credit card debt first.
Though we did not have a huge amount of credit card debt, it didn’t matter. By the end of the day, our credit cards were ALL paid off – with the expection of $200 on each card – and my husbandd figured that over a year, amortized over a year, we had saved $58,000 by spending 20 minutes in the bank. (A figure far LOWER than what we even owed to the credit cards!)
$58,000 for 20 minutes of work? Not a bad deal, I might say! And you are right about another thing: the banks know that THEY are in trouble. Consumers with good credit can now negotiate with THEM.

Glad it worked – and I hope you got what you wanted!

Rita

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That’s the difference. A computer can make a logical decision, but not necessarily a sound one – hey I think that’s a blog article, right?

That really sucks about paying off your car (or lack of paying it off that is). As for assuming mortgages, it’s rare these days but was quite popular about 20 years ago or so. It’s still possible, but most mortgages are written in a way that they are not assumable.

What many people, here in the US anyway, forget is everything is negotiable. I purchased an investment property about 5 years ago and asked the loan officer from Chase bank if my mortgage was assumable. He said no but after I told him having it assumable was important to me and was a potential deal breaker they added it into my mortgage.

And wherever you move to, I hope it makes you happy. I think it’s cool that you’re open to moving to just about anywhere in the world. That’s a potential life changer.

Your financing seems to be different over there also and a lot more fair. Like if you pay a loan off early, you only get charged the interest for the number of years you’ve had the loan. I wanted to pay my car off two years early but it wasn’t worth it as I’d have had to pay exactly the same sum as if I’d carried on paying monthly.

Also, I hear that you can often assume someone’s mortgage over there. There’s not a chance of that here. And the American’s think their banks are greedy ours are ten times worse.

But I’ll remember this advice because I recently found out I may get the chance to come and live in America after all, so you never know.

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