What are the things you need to be able to consolidate debts? This article contains practical debt consolidation tips for people with debt problems. Learn how you can overcome debt by consolidating multiple debts from different creditors into a single account.
Take a closer look at your debts. Before deciding which consolidation plan is most suited for you, you need to be aware of the type of debts you have- personal loans, credit cards, car loans, mortgages, etc. Know exactly how much you owe from each of your creditors. Order a copy of your credit report so you can examine your debts more closely.
Prioritize your debts. In order to prioritize your debts, you need to consider the interest rate as well as the existing balances for each of your debts. You’ll want to work with your largest debts and work your way down. Your goal is to finish off your high interest debts first before moving on to the next.
Decide the type of debt consolidation you want. There are two ways to consolidate your debts. One is to get debt consolidation loan. A debt consolidation loan will enable you to pay off all your creditors at once. This way, you immediately stop incurring the high interest rates on the debts you have. You can also start fresh with your creditors. In turn, you’ll be submitting your monthly payments to your debt consolidation lender.
Consolidating your debts through a loan means you only have to pay a single interest rate and usually a lower interest rate than what you used to pay. The most popular type of debt consolidation loan is a secured loan which means, it is guaranteed by submitting your home or property as collateral for your loan.
Another method of consolidating debts is applicable to credit card debts. Today, you can find balance transfer credit cards that offer low interest rates or zero interest rates. By transferring your existing balances from your high rate credit card to a low rate or zero interest balance transfer card, you save a great deal from the interest alone. Getting a balance transfer credit card enables you to focus on the original debts you owe without incurring additional interest charges.
Stick with your repayment plan. Whether you’re getting a debt consolidation loan or a balance transfer credit card, a repayment plan is crucial. To get out of debt, you need to be serious about submitting your monthly payments on time. This isn’t the time to get sloppy or careless about your payment obligations. You can’t afford to miss or delay with your payments since doing so adds more burden to your debt problem. Be optimistic and determined. Stick with your repayment plan no matter how difficult it may be.
Seek credit counseling. If the problem is brought about by uncontrolled spending or your inability to manage your finances efficiently, don’t hesitate to seek professional help. Go to a government accredited credit counseling agency and ask for help.