Making The Most Of Your Money

Making The Most Of Your Money

Killing Debt With Debt -- How To Find And Use Debt Consolidation

by Glen Robinson

If you're struggling with credit card debt, it can seem like there's no way out. But you do have several different options. The trick is to find the one that fits best for you. A surprising amount of debt freedom methods are counter-intuitive because they involve taking on more debt.  How does this work? Here is a handy guide to killing debt with debt.

Debt Consolidation

Debt consolidation is the act of taking all your various debts and rolling them into one manageable payment. One key to consolidating debt is to find a consolidation provider who offers a lower interest rate than you're paying now. 

So, where and how can you find a debt consolidation loan? Here are 4 ways:

  • Consolidation loans. Some companies offer loans specifically for his purpose,. The upside is that they will be familiar with the process of paying off old loans and may make it easier for you to qualify. However, you may not be able to get the best rate with these products.
  • Home equity loans. One of the best -- and often easiest - consolidation loans is a home equity loan. The unused equity in your home can be a source of capital for non-home debt. And it usually comes with the lowest interest rates of all these options. Keep in mind, though, that this puts your home at somewhat of a risk because it entangles your house with your ability to pay your debt. But this is usually a small risk and the benefits outweigh it in terms of affordability for many homeowners. To talk to an advisor about a home equity loan, contact Union State Bank
  • Personal loans. Personal installment loans are a great way to minimize your risk and still accomplish your goals. If you have good credit and a stable income, you can often take out a personal loan with no collateral or with a smaller asset (such as a car or boat) rather than your home. You can often take advantage of automatic payment options to ensure you never miss a payment. 
  • 0% interest cards. If you have good credit, you likely have access (or can get access) to credit cards offering 0% interest for a specified period of time. Because interest will not continue to build, this can be a quicker way to pay off your debt. There is a danger, though, that if you fail to pay off all the balance before the end of the promotional period, it could cost you much more than expected. Be sure to read the terms carefully.

One Caveat

For debt consolidation to work, you must take care to avoid the biggest pitfall: racking up the debt again. This involves being sure that you have identified and resolved the reasons that you accumulated debt in the first place. If not, your old debt will likely be replaced by new debt. One good way to avoid this trap is to destroy and/or close many credit cards as you empty them off.

By knowing how to use debt consolidation to eradicate your credit card debt, you can win the battle with less stress and less money. 


About Me

Making The Most Of Your Money

When it comes down to it, most of us could manage our money a little bit better. I found myself in this boat a few years ago, when I realized that I was almost broke because of my poor spending habits. I was tired of being constantly out of money, and it felt like I was drowning in debt. I knew that I wanted something to change, so I started focusing on making the most out of my money. I spent a lot of time completely overhauling my budget, and it really made a great difference in my personal life. I realized that I had a lot more money, and that I wasn't as stressed about finances all of the time. Check out my blog!