Considering Debt Consolidation? Read This First
By: Jacky W.
Many people who consolidate their debts (taking out one loan to pay off many others) end up paying far more than they would have otherwise. In the case of home equity loans, an alarming number of borrowers even end up losing their homes.
Debt consolidation, rightfully, has a bad reputation. You don't want to end up as one of the people who lost their home. Still, you may be able to benefit from consolidation if you carefully explore your options and keep these fifteen tips in mind.
1. Pay off debts
Treat debt consolidation as a way to pay off your debts, not as a way to free up extra spending money. You've got to control your spending or you'll just go deeper and deeper into debt. Unless you solve the underlying problem, you'll soon be back in debt, only you'll have the consolidation loan along with all the others. Get yourself on a spending plan and stick to it for several months before consolidating your debts, to prove to yourself that this is going to be a do-able route for you.
If you just want to save money, but you're not in dire straits, simply pay off your debts fast by prioritizing them. Pay as much as you can each month on your highest-rate loan while making minimum payments on your others. This way, you are able to lower your monthly finance charges as quickly as possible.
2. Get your credit report and FICO scoreAny loan you get will be based largely on your credit score, so you should find this out before you do anything else. If your credit score reveals that you actually score quite well and have a reasonable credit rating, you may be able to consolidate loans at a lower rate, especially if your credit has improved since you got the loans. Go over your entire credit report carefully to make sure it's accurate. Inaccuracies can hurt your score and keep you from getting the rate your deserve.
3. Negotiate lower interest
Call your credit card company: if you have relatively good credit, you may be able to simply talk to your credit card company and negotiate a lower interest rate. If they won't give you a lower rate, you may be able to transfer your balance to a credit card with a lower long-term rate or a no-interest introductory rate--just make sure you know what your rate will be after the introductory period.
A credit counseling agency can give free advice on how to manage your debts.
4. Get help of a credit counseling agency
A reputable credit counseling agency can provide you with free or low-cost advice on how to manage your debt, and they can help you prepare a budget to get your finances under control. Credit counseling, however, does not necessarily mean entering into a debt management program, and you should beware any organization that tries to push you into such a program immediately. In general, be careful when choosing a credit counseling agency. Even agencies that are registered non-profits frequently charge high fees.
5. Sell your car
If you can't afford your car payments, try to sell your car to pay off the loan. If the car gets repossessed, it will end up costing you even more money.
Have something to add to this article? Email the author!
The 21 Biggest Fashion Faux Pas
By: Julie Michelle Smith
Be first to read new articles and subscribe to our bi-weekly news letter.Our mailing list is free, opting out is easy and we don't send spam.
Eight Gadgets That Help You Lose Weight
By: Robert P. Make working out a little more fun by using gadgets.
20 Tips For Cost-Effective Grocery Shopping
By: Megan C. Save money on your daily groceries.
Celebrity Plastic Surgery Gone Wrong
By: Julie Michelle Smith Aging gracefully just isn't an option for most celebs.
25 Signs You Haven't Grown Up Yet
By: Matthew C. Have you fallen for the traps of maturity yet?
How To Become A Zen Master (While Doing Household Chores)
By: Donna Smith Introduce a little zen into your housekeeping.
Do you want to advertise your website, product or service through ReadTheSmiths.com? That's certainly possible!
We work together with a few of the largest ad networks worldwide. Geo-targeted advertising is supported.
If you want us to make you a custom advertising offer, contact us at email@example.com!
If you'd like to share your article with the visitors of ReadTheSmiths.com, we invite you to send us an email with your submission. We'd love to publish it!
You can also write us if you have a suggestion or general feedback. We look forward to hearing from you!
This website is run by professional writers Donna Smith (1965) and Julie Michelle Smith (1979) and their families.
Donna and Julie Michelle write mostly about health, travel and beauty related issues, while their husbands, parents and children write about tech, finance and entertainment.