The Wise Investor
The balance would simply go up and down like a
barometer of your financial health.
With a loan, however, the repayments are fixed and you
know exactly when the entire amount will be paid off. The
final advantage is simplicity. You have one fixed payment a
month to budget for, rather that running around from pillar to
post paying different people different amounts each month."
John paused, looked at Kate, and said, "Once you have
done this, Katie, for God's sake destroy your credit cards
and cancel your overdraft so you don't ever get into this
Kate sat back on the chair and thought over everything
John had said. It was a major change to her whole financial
situation, in fact a major change to the way she did things in
She had asked John for advice, and she had certainly
received what she asked for. She looked across at her
"OK, John," she said. I will use my cash to pay off my
loans, and what is left of the loans I will refinance with a
single personal loan. I will pay off the personal loan over the
shortest period that I comfortably can."
"Good girl," said John giving her a hug. "Did you get more
than you bargained for when you asked me for advice?"
"Yes," said Kate dryly.
She had been hoping for some secret investment
technique that would solve all her problems, and yet, she
saw that John's method would work, and she did appreciate
his efforts to help her.
"A few final comments on debt, and then perhaps we
should take a quiet walk," said John gently. He could see
that Kate was overwhelmed, that changes that they had
discussed would mean some big changes for her.
"Credit cards," said John, "are one of the most useful
Kate looked at her grandfather with surprise.
"Not as a form of borrowing," John said hurriedly, not