Debt Consolidation Strategies You Can Do on Your Own – The concept of consolidating debt is right in-line with the implications of the term. It’s basically taking a variety of outstanding lines of credit and combining them into one new account.
Credit card debt is one of the most common types to be consolidated in some way. However, you can also consolidate credit card debt with certain types of student loan debt and medical bills.
It’s also worth noting you’re only going to be able to consolidate unsecured debt. Secured debts such as a home mortgage or auto loan come with collateral. While you can refinance these for better terms, it’s generally not possible to consolidate this kind of debt.
There are several ways you can apply this strategy. Some can even be done without professional help. Here are some of the best debt consolidation strategies you can do on your own:
Balance transfers are one way you can consolidate debt without asking for any help. As the name implies, these are a type of consolidation reserved for credit card accounts. If you have several credit balances that are getting too large, a balance transfer might help you get them under control.
One feature of credit card balance transfers makes them a particularly effective method for consolidating debt on your own: the low introductory interest rate. To incentivize balance transfers, credit card companies offer rates as low as zero percent for up to 18 months. This is huge, when you consider credit card rates can be as much as 25 percent.
A credit card balance transfer can work if you’re committed to paying down what you owe during the low interest period. To do this on your own, you’ll need to come up with a repayment plan, and stick to it. It should be noted most credit card balance transfers come with a three to five percent transfer fee. This works out to $30-50 for every $1,000. These fees would need to be added into your calculations to ensure affordability before doing the transfer.
A debt management program is another way to consolidate your debts into a more affordable package. Basically, the debt relief agency communicates with your creditors, and then creates a single new loan for you to pay, while they pay back your lenders. People looking for affordable debt consolidation programs should consider Freedom Debt Relief.
The reputation of a debt relief program is really important in determining if the consolidated loan will be a good fit for you. There’s a wide range of credibility in this industry. Choosing a well-established player like Freedom Debt Relief will improve your chances of beating your debt.
While this definitely isn’t an ideal scenario, borrowing from life insurance and retirement plans can give you some much-needed cash to pay down your debts right now. If you are older you may also be able to sell your life insurance policy for immediate cash through a process called a life settlement.
Consolidation can be an effective way of getting out of debt on your own. But it’s important to understand the pros and cons of this process before getting into it.