Are you swimming in debt?
Are you desperately seeking a way to improve your finances?
Do you have reason to believe that debt consolidation is the answer to all (or some) of your problems?
With so many ways to consolidate debt, there’s a good chance you’ll find a strategy that works for you. However, before you can push forward, you must understand your options:
1. Balance Transfer Credit Card
If you have credit card debt – regardless of the number of cards – you can use this to your advantage.
For example, if you have $20,000 in debt spread over three credit cards, you could bring it all under one roof. Not only does this give you access to a zero percent introductory APR, but it helps from a management perspective as well.
2. Personal Loan
The nice thing about a personal loan is that it can be used for almost every type of debt imaginable.
From credit cards to medical bills, use this type of loan to bring all your debt together with one competitive interest rate.
As an unsecured loan, you don’t have to put up any collateral to receive an approval. As long as you have good or excellent credit, you should be in position to take advantage.
3. Home Equity Loan
Much the same as a personal loan, you can use this type of loan to pay off multiple debts. Upon doing so, you’re left with one loan to manage.
Unlike a personal loan, a home equity loan uses your home as collateral. The benefit of a secured loan is a lower interest rate. The drawback is the fact that the lender can repossess your property should you default.
4. Borrow from a Retirement Account
It’s not the ideal situation, but it’s a strategy to consider if there are no other options available to you.
If you have plans to borrow from a retirement account to consolidate debt, make sure you also have a plan for paying the money back in a timely manner.
5. Borrow from Friends or Family
It’s not always easy to ask friends or family for a loan, but it can be one of the best ways to consolidate debt into a single payment.
One of the primary benefits is the ability to secure a loan without completing mounds of paperwork. Also, you may find someone who is willing to lend you the money without interest.
On the downside, you could ruin your relationship if you don’t repay the money as promised. This is a big risk that some people are not willing to take.
Since there are so many ways to consolidate debt, you should be able to settle on a strategy that suits your financial wants and needs. Once you know what makes the most sense, you can take action with the idea of paying off your debt as quickly and efficiently as possible.