Are you saddled with lots of debt? Is it becoming too much to handle? If you do, debt consolidation may be the answer. This process is lengthy, so read on to learn whether or not it’s a good option for you.
Try using a debt consolidation service to pay down your debt. When you look for one, make sure they aren’t charging high fees. You can check with a local consumer protection agency like your local BBB. You may have to make sacrifices via using extra lines of credit and harming your credit rating, but they can help get your debt paid off. They generally require a single monthly payment.
Try keeping and applying for those introductory 0% interest credit card offers in the mail. Consider the amount of interest that you may save via consolidating all that debt onto your new card. You must use caution, though. Keep to a plan that lets you pay off the transferred debt during your low interest period. Don’t miss payments or you will make your interest rates go up drastically. Don’t open multiple cards and keep one of your old ones with a small balance on it.
If you have life insurance, you may be able to borrow money from the policy to help pay for your debts. The money borrowed is taken from the amount your beneficiaries will receive upon your debt. Many borrowers pay this money back so that their funeral expenses are covered.
Make it known to creditors if you use debt consolidation. Just this news alone might make them willing to make an independent deal with you. This is something you need to do because they might not know you’re trying to take care of your bills. Plus, they realize that you are attempting to responsibly manage your debts.
Find out whether debt consolidation will require you to take out another loan. If so, make sure that your rates are not too high. Some companies lure people in with the promise of a fixed financial world, but end up giving them a new loan that they have trouble paying.
Ask for a copy of your credit report before looking into debt consolidation strategies. Go over your report to find potential errors and use it to make a list of all your creditors. If you notice any mistakes on your credit report, have them fixed before working on paying your debt off.
If you own a home or land and have built up equity, you may qualify to take out a line of credit or home equity loan. These loans allow you to borrow against the equity of your home giving you instant access to cash to pay off your outstanding debts.
Once you begin a debt consolidation pact, all your purchases now should be made in cash. You never want to fall back into your old ways of having to use credit cards to pay for everything. That may be exactly the bad habit that forced this situation initially! Using cash will give you a greater control over your spending.
If you have a 401-K, you can use it to reduce your debts. This will let you borrow from yourself rather than from a bank. Make sure you do have all the details before borrowing, and know that it is a risky venture as it can take away your retirement funds.
Debt consolidation isn’t necessarily your best bet if you are middle aged. Remember that the smaller payments will be carried on well into the future, so when you are 50 and you take on a 20-year line of credit, you may be forced to retire while still paying off your debts.
You need to consider if debt consolidation is truly the answer to all of your problems. If you don’t change your spending habits, it won’t actually better your future. You have to commit to the process entirely, from saving money for emergencies to not spending on things you don’t really need.
Think carefully about the contract offered by your debt consolidation agency. Go over the terms and conditions and assess the impact of this payment arrangement on your finances. Make sure this contract is a better option than paying your creditors back without merging your accounts, for instance by calculating how interests will add up.
If you have an equity line of credit which is secured by your home, consider taking out the equity you have to help you pay off your other debts before getting a consolidation loan. If you have enough to get rid of smaller debts, you will end up paying less each month, leaving more to put down on your larger debts.
Among many options for how to tackle your debt, which one is best for you? If you think debt consolidation is the correct pursuit for your needs, utilize what you’ve read to guide you through the process. With these helpful tips, your debts can become more manageable and you will be on the road to living debt-free.
