Wednesday, July 23, 2008

The worst, the bad, the good and the best

The worst: I have this big personal loan that I have to pay. I got it 20 months ago as a way to lower my main credit card bill because I had run it up trying to help my wife start up a clothing store in a street market in the city. I funded her business twice and eventually all I got from that was this big debt. I took a loan at 24% to pay this balance on my main credit card. Since then I failed to keep my main credit card in zero balance. Now I have this loan AND the credit card balance. I hate myself for having done this so many times now that it's so embarrasing to admit to making the same stupid mistake so many times.
The bad: I'm on payment 20 out of 48. Yet another debt to add to all the money I owe. Amount owned at the moment: $6458. Current monthly payment is $311. Will I be able to make this month's payment?..stay tuned cause I certainly don't know if I will get payed for some extra work that i've been doing or for some extra work that I quoted to do on a monthly basis.
The good: Ironically the good part is that I got a letter from that bank stating that they were going to rate my interest rate due to the new regulations including the monetary policy rate. The new rate will be 29% So my new monthly payments would be $325, a $15 increase. Not that much but it's an increase.
So how is this good? Well the letter included an opportunity for me to extend my loan term up to 60 months. So today, actually just a few minutes ago (i'm still aching from walking to the bank branch), I went there and ask for my loan term to be extended to 60 months. The customer service agent said that normally they would extend my loan to 60 months from the date it was originally created. So if the request goes thru normally I would start next month be now on payment 21 out of 60 (or 1 out of 40). New monthly payment would be $257. $54 less per month but obvioulsy I would end up paying more interests in the long run.
However right now I'm just trying to get all my payments within my budget and I would be hard pressed to get a lower rate loan that this one even at 29%. So I took this offer.
The best: I asked the agent if they could actually refinance my loan to 60 months starting from today, not from 20 months ago. He wrote that in my refinance request. If it does go thru this way, I would have just started with a new loan of 60 months to pay for the $6458 at 29%. Monthly payments would be $207. About $104 less per month.
Again I would obviously pay more in interests but in a year or two when I (hopefully) have payed other debts and have more money available I can ask them to shorten my loan term and I'm sure they would be happy to do so. Otherwise I could still get a shorter term in another bank or in the end save up the extra money in an account in their bank and when I reach the balance due, pay it all at once. That will be a very happy day for me.
On the income front, my wife went to job agency today and got letters to visit a bank and a drug company to see if they can hire her. She went to a retail department store about two weeks ago and she has called them every other day and they tell her they will schedule her for tests soon, but still nothing solid.
In the mean time, I have one credit card payment that is already late. I've payed part of it. I have this loan that it's payment was due yesterday, so I hope that even with the late payment they still approve at least the "good" part.
The real hits will come in about a week when I have to pay my main credit card and the minimum payment (lempiras + dollars) is about $650. By then I probably won't have that amount of money so the payment will be past due. I hope by then that this loan refinance will have gone thru (it's the same bank) positively. Either way I will then call or go in and ask them to cancel my credit card and set up a payment schedule for me.
To think that the operations manager of this bank is in the board of directors of my company gives me all kinds of thoughts. Would he help me with a better loan to cover what I owe to his bank? or would he stand by the banks procedures and not help me. Would he keep quiet about my situation or would he eventually talk about it with my boss (who is not only work related but also a friend of him)?
I know that he is a straight man and respect procedures. I know he also helps when he can. I worry that if I ask him for help and explain my situation he might just say that it's out of his hands since my problem is with the credit/loan department and not the operations department. I then would worry that with his inability to help me but knowledge of my problem and how it would affect his bank, that he would talk to my boss about it. I have heard them talk about people running up credit card debt so many times that I would probably pass out in his office if he started asking me questions about that. I have no clue what would they would want to do with/to me.
Pray for the "best" out of this loan. Pray for my wife getting a job SOON. Thank you!
Well, at least this blog is free. ...sounds like this could be my signature from now on.


Steve Smith said...

In the states anyone in your financial position would qualify for bankruptcy protection. They wipe out your debts and credit. Are there any such laws in Honduras?

AJ said...

I don't know if there are bankruptcy laws in Honduras. I really hope I don't have to find that out but I guess it would be better to know all my options. I'm thinking I will have to talk to an attorney about it.

Thanks for the idea. I will keep it in mind. If there was such an option I would seriously consider it. I've seen it on cable TV when some young adults have taken that option to start over.