Consolidate Debt

Consolidate Debt

Are you looking for a good way to consolidate debt? There are so many debt management programs out there that can help that you're sure to find one that will work for you.

Debt Got You Down?

Then say, "Down with debt!" Okay, that might not fix things, but it's the right attitude. The best way to annihilate your debt is to consolidate it. There are a number of ways to consolidate debt, and we're going to tell you a little bit about them here.

The most popular way to consolidate debt is debt consolidation. Sounds a little redundant, huh? Let us explain. When you hire a debt consolidation company to help you consolidate debt, they contact your creditors and try to get you big reductions in interest rates and get any past junk fees removed. This results in lower balances, which are then bundled together by the debt consolidation company. Then you make one monthly payment to the debt consolidation company instead of several monthly payments to creditors. Because of the reductions, you can be debt free in about five years - and they'll be ever easier years when you consolidate debt online.

Another way to consolidate debt is through a debt consolidation loan. Let's say you take all your credit card balances, add them all up and come up with...$8,000 or so. (This is just some random number choice.) Then you contact a debt management company for a debt consolidation loan. Your car is paid for, so that is your collateral (tip--you can't get a debt consolidation loan without collateral). They cut you a check for the $8,000 or so, pay off your creditors and make one monthly payment to the credit card company. In five years, you're debt free! You might be wondering why you can't just do this yourself by continuing to make payments to your creditors. The main reason is your creditors are charging exorbitant amounts of interest--and finance charges--each month! A debt consolidation loan has an interest rate that's usually in the single-digits and no finance charges.

The best way to eradicate credit card debt is through a debt consolidation mortgage. Of course, this only works if you're a homeowner. What it does is adds the amount of your debt to your mortgage so you get the same low rate as your mortgage. And since you can write off some of your mortgage interest, you're also writing off some of the interest on your debt as well. Your house payment might go up a little ($25 or so each month) but it's worth it when your credit card balances are all zero!

Another option is debt settlement. This reduces the amount you owe by 60-80%, but you have to have the money pretty much immediately. Your creditors think that if you're going to end up paying less than you actually spent, they're going to want all their money now. And they're going to report it to the credit bureaus. Yes, it will be paid, but because the debt was settled instead of paid in full, it will be a negative mark on your credit that will stay there for seven to ten years.

As you can see, there are many ways to get rid of your debt, and some are better than others. But no matter which option you choose, get a little credit counseling to go with it so you can learn how to stay debt-free forever!

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