How Can I Consolidate My Debt?
Debt consolidation is increasingly becoming the option of choice for many people who have a high amount of debt especially those from credit card loans. Such popularity arises from the fact that debt consolidation has many advantages, the most notable of which are favorable interest rates and repayment periods as well as paying off just one debt.
However, debt consolidation is not exactly for everybody. You need to determine your credit score, renegotiate for lower interest rates and be honest about your ability to pay off a bigger loan. Keep in mind that 70 percent of Americans often end up still unable to pay their debts even after consolidation.
If you do decide to go for debt consolidation, you can do so in two ways. Of course, you should carefully consider each option as it applies to your case.
This is certainly doable although you have to stay on top of things – that is, you need to keep organized records, make on-time payments and update your credit status. You also have many options in a do-it-yourself scenario depending on your assets and the type of debts you have to pay.
First, if you are a homeowner, you are in a better position to consolidate debts because you have a major asset as collateral. Also, the interest paid on the loan is oftentimes tax deductible. You must, however, take precautions in borrowing against your house such as making sure that you only borrow what you absolutely need, check the fine print, and compare interest rates.
Second, you can tap into your other assets. Think of withdrawing from your retirement plans, refinancing your car, borrowing against your life insurance policy, taking out a loan from your credit union, and even asking family and friends for personal loans.
The most important part of this consolidation plan is that you must keep a level head to make sure that emotions play little to no part in this decision.
If you think that you cannot handle the nitty-gritty details of debt consolidation, you always have the option of professional services. Basically, you find a professional who will provide expert advice and assistance on the consolidation process. In turn, you should be able to enjoy lower interest rates and shorter repayment terms. In many instances, you can even enjoy the benefits that professional counseling in financial matters offers.
You nee not even be ashamed of your plight because these professionals have seen it all and heard it all where consolidating your debts is concerned. However, you do have to be careful about your choice for a debt consolidation company and the professional assigned to your case.
You want a company and professional who can explain in detail and in terms you can understand the debt consolidation plan and its effects on your finances as well as their fee structure. You must shop around and do your researches before settling on the company, of which member agencies of the National Foundation for Credit Counseling come highly recommended.