Accumulating large amounts of credit card debts can take a toll on your finances. The best way to prevent such a thing is by avoiding unnecessary liabilities and by paying your dues on time. However, if you’re already caught up in a mountain of debt, you have the option to consolidate debt.
Debt Consolidation is taking out a single loan for you to pay out your existing debts. There are many ways on how you can consolidate debt – some of which are as follows.
Make Use Of A Low Rate Balance Transfer
If you have a credit card with a credit limit that’s large enough to accommodate some of your debts, then you can use that to consolidate debt. One must make sure not to go overboard the limit, and that you will actually save some cash by choosing low rate balance transfers, This way, you won’t have to end up paying more than your original dues.
Ask Help From Family And Friends
If you have someone like a friend or a family member who’s willing to give you a hand in paying off your debts, consider yourself lucky. Find one who doesn’t have any financial struggles and make sure to share your budget, let them know how you plan on paying them back and that you’re capable of paying them off. Include your monthly payments plus interest rates, if any. Be honest with your financial situation, keep open communication and to keep your part of the deal.
Go For A Cash Out Refinancing
For homeowners who already build enough equity in their homes, you can use this to apply for a Cash Out Refinance Plano. This type of mortgage allows you to tap on your home equity and acquire a lump sum of cash that you can then use to consolidate debt. You’ll need to have a good credit score, a healthy credit history and enough financial records showing you’re capable of paying off the loan. It’s important to note that you’re putting your home on the line when applying for this type of loan. So, make sure to use the funds wisely.
Apply For A Life Insurance
This may not be the best way to consolidate debts, but it is often the better choice than filing for bankruptcy. The great thing about borrowing the cash value of life insurance is that you can choose not to pay back your insurance company as long as you only borrow an amount less than the policy cash value. However, it would still be best to pay them back or else your beneficiaries won’t be able to claim any benefits once the company uses the death benefit to pay for the loan.
Borrow Against Your Retirement Plan
Some companies who offer 401K Loans allow you to borrow against them. Usually, you can repay the loan within five years. If you fail to repay the company, you’ll end up having to pay income tax and penalties or even early withdrawal. Make sure to think hard before borrowing against your retirement plan. You wouldn’t want to face a problematic retirement in the future.
These are only a couple of ways that can help you consolidate your debts. Before taking your pick, make sure to consider your situation, your preferences, and circumstances. Compare the pros and cons, and you’ll learn which one will work best in your favor.