A recent client of ours, Shane* (name changed to protect privacy) has given us permission to share his story, hoping to help others take the same steps he has taken to take control of his financial future.
Shane is 43 years old, rents his family home alongside his wife and adult children, and has found himself carrying 4 relatively small, unsecured personal debts all at relatively high interest rates. Shane was on top of his bills and repayments, meeting all payments in a timely manner and even making occasional extra repayments when he could. But with so many repayments hitting his accounts so frequently, he never felt like he was really in control.
Shane’s situation looked like this:
He had 2 credit cards, from two different banks, owing a combined total of $10,500. He typically paid $80-150 per month off each card, and was usually near the limits by the end of each month. He was reducing his balances some of the time, but the majority of his repayments were just covering the monthly interest charges and not actually paying down the debts on the cards.
He also had a small personal loan that he had taken out to help cover funeral expenses for a family member, with approximately $6,000 owing and $270 monthly repayments.
Finally, the loan that Shane was most embarrassed about taking out, was a high-interest facility to pay for an International Cruise with his wife, for a well-deserved delayed honeymoon several years after their wedding. He admits he didn’t do enough to understand the loan terms when taking it out, and was stuck paying $509 every month at an effective interest rate of almost 30% pa. The fees alone were over $600 each year!
All together, Shane was paying around $1,079 across the four debts each month, detailed below:
| Debt/Loan | Amount Owing | Current Monthly Payment |
|---|---|---|
| Credit Cards (Combined) | $10,500 | $300 |
| Personal Loan | $6,000 | $270 |
| Holiday Finance | $3,000 | $509 |
| TOTAL | $19,500 | $1,079 |
Once we met with Shane, we knew we could help him to take control of his debts and get him into a position he could really take advantage of. His credit cards alone were going to take over a decade to pay off if something didn’t change. After reviewing Shane’s financial position, we determined a debt consolidation personal loan could help him to get ahead on his finances. Taken over 3 years, Shane paid out and closed all 4 of his previous debts, and carried forward with a new, single monthly repayment of $715.
But Shane wanted to get ahead faster than that – and he knew he could comfortably afford to keep paying over $1,000 each month, as he had been when we first met with him. We had set Shane up with a new personal loan that allowed unlimited additional repayments at no extra cost – and by paying his previous $1,079 towards his new consolidation loan every month, he is now on track to be completely debt free in less than 2 years’ time.
He still has plenty of hard work ahead of him – but the simplicity of one repayment every month has resonated with Shane, and he is delighted about getting out of the credit card cycle and feeling like he is making progress quicker than ever before. He has even made quite a game of trying to really maximise his extra repayments, every chance he gets.
If you feel like you are in a situation similar to Shane’s and want to speak with an expert to see what your options are, please reach out to us and let us see how we can help you.
Contributor: Alex Jacques – Director, Jacques Financial Group
