Even when amicable, going through a divorce is never easy, but worrying about money can make it much more difficult. That’s what Miranda Marquit found out. When her husband asked her for a divorce in 2015, she knew she wanted to move herself and her son to another state.
“I was living in Pennsylvania at the time,” explained Marquit. “I wanted to move back to my hometown of Idaho Falls to be closer to family.”
But, after going through an expensive home sale and divorce, Marquit didn’t have a lot of extra money, and she needed help financing her move. That’s where a personal loan came in.
Getting a Divorce
According to Marquit, a freelance writer, her divorce was an amicable one. She describes it as a “kitchen table divorce,” where she and her husband were able to handle the split almost entirely on their own. “Within four weeks, the divorce was complete,” she said.
“Although I was in a good position, I didn’t have a lot of extra spending cash to throw around.”
Marquit was awarded primary custody of her son and wanted to move closer to family so she’d have their help and support. However, financial concerns limited her options. “Although I was in a good position, I didn’t have a lot of extra spending cash to throw around,” Marquit said. “My ex-husband and I had just emptied our savings account to pay our real estate agent to sell our home. Everything was depleted.”
Moving Across the Country
To cut down on her moving costs, Marquit got rid of the majority of her things. “I got rid of 75% of my stuff,” she said. “For example, I sold my dining room table set. My ex-husband kept some of our bigger furniture, like our couch, so I had less stuff to schlep across the country.”
She packed her things into a UPack pod container rather than using a moving service to keep her expenses low and decided to drive to Idaho Falls with her son and her remaining possessions.
“We could have gotten there in three days,” Marquit said. “But after everything that happened, I thought it would be more fun to take a 10-day road trip with my son. We planned on seeing Mount Rushmore, going to a waterpark, and just enjoying being together.”
The actual moving expenses cost her $2,000. She also needed a $1,000 for a security deposit on a new rental home and decided to spend $1,000 on their road trip. All told, she needed $4,000 to finish her move to Idaho.
Taking Out a Personal Loan
Without money in savings, Marquit needed to find alternative financing.
“I decided to take out a personal loan,” she said. “I had taken out one before and had a good experience. And, it was much cheaper than charging my move onto a high-interest credit card.”
Marquit’s decision to use a personal loan rather than a credit card was a wise one. According to the Federal Reserve, credit cards charge an interest rate of 15.54%, on average. By contrast, Marquit’s three-year, $4,000 personal loan had an interest rate of just 9%, helping her save hundreds.
If Marquit had used a credit card with a 15.54% interest rate and had a monthly payment of $90, it would take her over five years to pay off her debt. Plus, she’d pay back a total of $5,940. The high-interest rate would cause $1,940 to accrue.
With her personal loan, she was debt-free within three years. And, she repaid a total of just $4,579, saving her $1,361. After going through a divorce, that savings was significant.
|Credit Card||Personal Loan|
|Length of Repayment||5.5 Years||3 Years|
|Total Interest Paid||$1,940||$579|
|Total Balance Paid||$5,940||$4,579|
With her move complete, Marquit focused on building a new life for herself and her son. For the next three years, Marquit made just the minimum payments on her personal loan.
“I could have paid it off sooner, but I decided not to because I had other goals, such as investing,” she said. “It was a low enough rate that I felt comfortable investing my money rather than using it to pay off the debt ahead of schedule.”
Finally paying it off in July, Marquit credited eliminating her debt by giving her more freedom.
“It feels really nice,” she said. “Getting rid of the debt made me feel more comfortable quitting my job to pursue freelance work, which I did this summer.”
Shopping for a Personal Loan
Going into debt is never ideal. However, when used strategically like Marquit used hers, taking out a personal loan can help you responsibly reach your goals.
“Go into it with your eyes wide open,” Marquit said. “But a personal loan can help you get the cash you need with speed and convenience.”
Before applying for a loan, make sure you can comfortably afford the monthly payments. If you decide that a personal loan is right for you, check out Earnest’s moving and relocation loans to get the money you need quickly.
This article was written by Kat Tretina, a freelance writer based in Orlando. Focused on personal finance issues, she’s dedicated to helping people pay down debt and boost their income.