debt management

When people get into financial difficulties, sometimes they’ll start considering ways of consolidating their debt to get out of trouble. Some ways of doing it work well at times, while others don’t work as well.

One thing you might consider is a debt consolidation loan. There are actually two ways to do this. One, if you have a home, you can try to obtain a line of credit against the escrow in your home! What that does is gives you the cash up front, and it works the amount you’ve taken out into your monthly mortgage payments. You end up with one simple bill, which is nice. You also, however, have to make sure you keep up with your payments, since now it can affect your home ownership if you default.

Two, you can get a separate consolidation loan, usually through a bank, to pay off all your debts, and have one big payment a month to make. This will cost you less than what you’ve been paying to your creditors, and the loan rates usually are around 7.5% or lower, depending on which bank you go to. It will cost you more than getting a line of credit, but your home is protected.

If you get a consolidation loan, you’ll want to make sure you list everything you want that loan for. You can pay off student loans, credit card debt, and even outstanding tax payments. Pretty much anything you want to pay off, except your mortgage.

If your debts are small and your credit history is pretty good, you can look into getting a 0% credit card and doing balance transfers of your outstanding credit card balances that way. It’s a nice way to get a short term cash boost, but be aware of some contracts which only limits the 0% to a short term, then jumps the interest rate drastically.