If you’ve ever gone to college, owned a credit card, built a home or had kids go off to college, whether you should use loans to pay loans is a question you will ultimately have to answer.
Debt can be devastating, financially, emotionally and spiritually speaking. I know this first hand. I incurred a massive debt sending my daughter to a fancy university on top of the mortgage. Though I certainly don’t regret either decision, the resulting debt crushed me like heartbreak.
Doing it Alone is Hard
I certainly struggled to pay all of it off on my own. My marriage ended (finances certainly played a role) and I had to shoulder a huge debt with little support. My daughter was just entering the job market and was barely surviving with sky-high rent in big cities. Around this time, to me, it felt like the most sensible thing to do was to take out a loan to pay off at least the small loans to get a load off my back.
Other Loans Can Help
Loans, in fact, are one of the ways to pay off other loans, surprising as it may be. Some types of loans allow borrowers to consolidate many mini loans into one big pile. It all depends on the type of loan you take out and your individual creditworthiness. (If you have declared bankruptcy before, this will most likely not be an option for you.) For seniors 62 years and older, one option is by accessing their home’s equity through a reverse mortgage. This can be tailored to fit the purpose of the loan and according to your needs. Back then, I wasn’t fully aware of all the options available to me, and frankly speaking, I wasn’t really in the right state of mind. One time when I felt like I couldn’t take it anymore, I took out a personal loan from a local lender to pay off the loan I had taken out to send my daughter to university.
I paid off the student loan. But, I also ended up with a bigger loan at a 12% interest rate. I don’t think “stupid” really covers my decision.
A Bottomless Pit
This is what most people don’t tell you about borrowing. Once you borrow a huge sum, and you can’t pay it off, you end up borrowing more, sinking even deeper into debt. This is how indentured slaves were kept captive in tea plantations during colonial times. Debt, unlike real chains, are better restraints.
I realized my mistake only too late. I hardly had any legal avenues to keep the new debt from piling up. There was a lot of crying and hair pulling, and afterwards, I began to do some research. My options were severely limited. The ex and I had already taken out a home equity loan for the mortgage plus some other loans. In the end, my option was to take out an interest-free loan to sort out at least the balance of the bigger loan.
I’d say I was lucky that some of my friends and family pitched in to help. They let me pay off the interest-accruing loans, and now I’m gradually paying them back on a monthly basis. I’m almost there to finally being debt free. The lesson here is, borrow wisely. Don’t borrow more than you can pay off, and never take out high-interest loans to pay off other loans.
Would you ever take out a loan to pay another loan?
