Are you drowning in debt and unsure as to how to get out of it?
If so, you are like millions of other individuals, and the answer you are looking for might be as simple as consolidating your debt.
Debt consolidation offers a world of relief in many ways, but it should be approached with caution.
Continue reading to learn more about this great budgeting option.
Don’t fall victim to companies claiming to cut your monthly payments in half with just one phone call.
It is understandable that you want a quick solution to your problems, however, you can just be making your situation worse.
Sit down and consider the different debt consolidation options that are available to you and decide on the pros and cons.
Consider a bill consolidation service to help with your monthly debt.
When you seek to consolidate debt, paying monthly bills to individual companies can create confusion and missed payments.
Use a consolidation service that will pay these providers for you. You supply them with one lump sum each month and they will quickly dole it out for you automatically.
Ask your credit card company if they’d accept a lump payment for a lesser amount than the debt.
Many companies will accept 20% to 30% less than the amount you owe currently just to get the cash in hand. If you can scrape up the cash, this is an excellent way to save funds that can go to other debts.
Avoid debt elimination arbitrators.
These companies love to claim that your debt can be eliminated, though in reality they know that only bankruptcy can result in total elimination.
The best these companies can do is reduce the debt you owe.
Surprisingly, this is no different than you could do by calling and negotiating with creditors yourself.
If you own your home, consider taking out a home equity loan.
Since the interest on these loans is tax-deductible, you can save money in multiple ways.
Provided you are able to get a good interest rate, this is a smart way to consolidate your debt into one monthly payment.
If you are a homeowner and have lots of equity in it, try taking out a line of credit or home equity loan.
This can help you use use that money for nearly anything you desire, including debt consolidation, and the interest paid is tax-deductible. This will help you save money in multiple ways.
Know what you’re getting into. This is critical.
Before you sign up for any debt consolidation program, be crystal clear about the terms.
Not only that, but if you’ve taken out a debt consolidation loan, make sure you are sure that you got the best loan rate available. Find out as much as you can.
Debt consolidation offers relief to many, but it must be approached with care.
If you take the time to re-read this article and understand the basics of this financial management tool, you can make an educated decision about whether or not it is for you.
This can help to relieve some of the financial stress you are now facing by helping to simplify your life.