If you feel like you are struggling with debt, you’re not alone. You have likely heard that you should try to consolidate your debt. Debt consolidation is a financial strategy that merges multiple bills into a single debt to reduce interest payments and save you money. The option that best suits your needs will depend on a lot of factors – your overall debt, credit score and history, available cash, etc. Here are a few ways to help consolidate some debt, you may want to consider.
- Work with a nonprofit credit counseling organization to receive advice and create a plan for paying off your debt. Look for a National Foundation for Credit Counseling (NFCC) accredited organization if you are considering this route. You can speak to a financial counselor who can help you get started with a financial review and establish a budget and a personalized action plan.
- If you have multiple credit cards with a balance on them, you may want to consider transferring these balances to a 0% balance transfer card. This type of credit card charges no interest for a designated time frame, the introductory period, and allows you to pay off your balance without incurring additional charges in interest. You may be charged a balance transfer fee for moving your debt over. When choosing a card, consider the balance transfer fee and the length of time you will have to pay down the debt, with no additional interest charged.
- If you are a homeowner, you can take out a home equity loan or line of credit on your home. You can use the loan to pay off higher interest debts. A home equity loan is a lump sum loan with a fixed interest rate and a home equity line of credit works more like a credit card with a variable rate. Very often, this is the best option to achieve manageable monthly payments with lower rates and fees. Spencer Savings Bank is currently offering extremely competitive rates on these products.
- Borrow against your life insurance or retirement. This is not one of the best ways to do it (since it can risk your retirement or benefits to your survivors) and is not highly advisable. However, if you are in a bind and there is absolutely no other way, this may be an option for you to consider. They are generally due to be repaid in five years. Your place of employment may have rules and will have more information.
- Borrow from a friend or family member. Make sure you really can pay it back as this can affect your relationship with that person. Be willing to sit down and discuss the matter openly with them. Share your budget, debts, monthly payments and interest rates with them. Show them a plan of how you can afford to pay them back and then do it.
If you feel like you are buried under multiple debts, consolidating your debt can help you get control back over your life, improve your credit score and save money. Make sure that you think through your situation to make the best decision for you. There is assistance out there. Get some help, stay on track and achieve your money goals!