Irrational fear of borrowing

This is both a financial and personal query: I have €2000 worth of debt on two credit cards, not a huge amount, I know, but something I feel is hanging over me. I have reduced this amount from €4000 over the past 18 months.

I can afford the repayments (I pay off about €300 a month) and theoretically should be clear of them in the next year or so but lately am beginning to feel that I'm getting nowhere with them - possibly due to some personal expenses at the moment and the fact that i'm still using them on occasion. A friend suggested getting a loan to clear them. I've applied, been approved and I have the forms in front of me ready to sign.

Logically, I know this is the sensible thing to do but I am afraid to sign them. My first fear is that I will get into a similar situation that I did ten years ago - getting out loans to pay off the credit card debt, building up the debt again, getting more loans, etc. I only stopped this cycle a couple of years ago when I cleared all loans before buying my house but I am terrified it will happen again.

My second fear is that while the repayments (about €200 a month over a year) are affordable, I've enjoyed being without any direct debits (apart from the mortgage) going out every month. I know, this makes no sense as I pay off the credit cards, but as I say, this is an irrational fear.

So my questions are - am I right to take the loan and pay of the debt? I believe that I am - the interest rate is obviously lower and I'll be free in eleven payments.

Secondly, has anyone else ever had this irrational fear over borrowing - I know I'm being sensible, I'm only borrowing the amount for the credit card debts and not another two grand that I'd love to have to finish doing up my house. But why is this making me feel sick to my stomach?

I guess I'm looking for independent reassurance that I'm doing the right thing - and I ain't going to get that from the bank!

Taking out the loan to clear the cc's will save you money...it's the right thing to do.
There's a contradiction here-you've no problem running up massive credit card debt which costs you a fortune but you've a problem with taking out a loan which makes financial sense. The lesson is don't live beyond your means...it takes discipline but is well worth it for the stress it will save you.

sugark said:

I believe that I am - the interest rate is obviously lower and I'll be free in eleven payments.

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Do you hear that?

Do it. The only reason not to do it would be if giving more money to the bank brings you a warm, inner glow... (?)

Hi there,
I was in the same situation as you over a year ago €4k credit card bill which I was paying off at €300pm.

I was on top of the payments but as the interest rates were rising I tought I'd take out a loan.. And that I did - so no cc bill.. since the card has been changed to chip and pin I didn't reset the pin number and am unable to use it in town....
A big blessing btw - no cash no shoppping!!! No overdraft - no cc bill

Like u I hate takling out loans and have paid the loan of early....

Thanks for the prompt reply - and the sound advice.

I do see the contradiction about being afraid to borrow but not to use the cards and that I'm being irrational being nervous to borrow but will use the cards when stuck.

I really should sign the papers and get on with it - and make the decision to get rid of the cards.

pinkyBear said:

since the card has been changed to chip and pin I didn't reset the pin number and am unable to use it in town....
A big blessing btw - no cash no shoppping!!!

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Did you close the CC account, or are you still paying the €40. per year for the pleasure of having that little plastic card.

Time to cut the umbilical cord totally, get out the scissors

Did you close the CC account, or are you still paying the €40. per year for the pleasure of having that little plastic card.

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No I still have the card.. I use it for online transactions such as buying oil and traveling.. My biggest problem was town...and the many temptations it presented to a fabulous "but broke" woman as my self!!#

The thing is now I can control my spending, and I cant buy random "cr0p" when I'm pottering about town!

Thanks guys - I usually go with my gut instinct but on this occasion I think my gut hasn't a clue!

Once cards are paid off I'll cancel the cards and start budgeting a bit better. Just because I got into a bad cycle before of getting loans to pay off the cards and then running up the card debt again, doesn't mean I'll do it again. And that's the thing I'm most afraid of.

Getting rid of the cards completely really is the only solution.

Reducing the limit on the card to as low as it can go is another option. You still have the use of it for arranging travel and purchasing oil etc. Very easy throw a few €€ into your card now and and again to cover these items-essentially keeping it in credit.

sugark said:

Once cards are paid off I'll cancel the cards

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Why wait? Cut up your cards right now. If you can't resist the temptation, and it's causing you sleepless nights that you might fall into the same hole you fell into before, then cut them up right now. At least that prevents you from putting anything else on them while you're paying off the debt.

If you really need one, cut up any others, and put the remaining one in a bowl of water in the freezer - that way, you'll have to wait a few hours for it to defrost before you can use it (and no cheating by defrosting it in your microwave, you'll blow the thing up ).

sugark said:

Getting rid of the cards completely really is the only solution.

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You said it.

Take out the loan and give your credit card to a trusted friend/family member. Tighten the belt for a few months and clear the loan. The minute your loans are paid off you'll have an extra 300 per month in cash - the funny thing is that you get used to your liflstile and will want to save that 300 quid...so you'll move from owing money to owning money
Best of luck

Well, I've signed the loan papers, cut up the card with the €10,000 limit and have given the one with the €1000 limit to a friend. Once the loan comes through and the cards are paid off, I'll set up a standing order on the €1000 limit card so the balance is cleared every month. No more living beyond my means!!

Thanks again for all the objective advice - it is very much appreciated! I know from reading the other threads here that there are people in much more debt with credit cards and loans then I have and I truly appreciate how scary that can be.

All going well and getting my usual bonus at Christmas I can have the loan paid off early.

Thanks again guys.

Best of luck Sugark...keep at it and buy yourself something nice with that bonus at Xmas!

sugark, make sure you get rid of the other card and tell the credit crad company you are closing the account. The balance on the account should be about €40 extra for the government duty. If you don't advise them they may keep the account open and send you another card. Also i know you are setting up a direct debit for the €1000 limit credit card but i would still suggest you use it as little as possible and try and work on a cash basis. Much easier to budget and to know what you have left during the month.

Suggest also you draw up even a very rough budget of your costs during the month including putting some aside for annual costs - car insurance etc.. so you know what you can spend without overstretching. Perhaps when loan is paid off try and save what you were paying off loan so that you have an emergency fund for the future. Best of luck

Thanks Thrifty. I have cancelled the card and am awaiting the final bill just to pay off whatever bit of interest is left. The credit card with the small limit I have will be kept in a drawer so no spontaneous shopping sprees. Feeling free and wonderful and plan to have loan paid off in January. And will take your advice re starting to save that €200 once the loan is paid off.

Just posted another tread re setting up the credit card direct debit to pay the full amount - any assistance on that one also welcome.

BTW, the advice here really has been very much appreciated. I feel far more in control of my financial situation than I did last week.