There are many reasons why one can fall behind on bills and end up in debt. Losing a job, taking on more purchases than you can afford, experiencing a major life change; Whichever it may be, one strategy to bounce back is through debt consolidation.
What is Debt Consolidation?
In a nutshell Debt consolidation is taking out a loan which pays off all your other debts. Now rather than having to make payments to multiple debtors, the payment process has been simplified to just one person.
I'm already in debt, you want me to take another loan?
One thing to remember is that not all debts are the same. Some carry higher interest charges than others. Credit cards can typically be around 18-25% while an auto loan could be from 0.9-5%.
Taking out a debt consolidation loan allows you to simplify the re-payment and can minimize the interest on those higher debts.
What do I need to do to get started?
The first step is to make a list of all of your debts and who you owe them to. Determine if it is a secured loan (such as an auto loan) or unsecured (like credit cards). Gather up the interest rates, monthly payments and lengths of the loans. With this information you can determine if debt consolidation will work for you.
Prioritize your debt
Once you have your list, you can determine which needs to be paid off first. Your highest priority will most likely be high interest credit cards.
Find a lender
Before you pick a lender, know your credit score. A bad credit history might make debt consolidation not worth your time.
Shop around for a lender. Some may offer you different rates as well, there are plenty of institutions to pick from.
Pay off your debt
Take the money you receive from the loan and pay off your other debtors immediately. Using that money for other things will only make things worse for your situation.
Debt consolidation is not for everyone
These are some basic guidelines to help you get out of debt. There may still be situations where it will not work for you. It's best to speak to a financial advisor to put a plan together and get a good solid timeframe when you can be debt-free again.
Network Advantage Card members have access to financial advisors to help with their specific situations. Find out how we can help you out.
How To Deal With A Mountain Of Debt
There are many reasons why one can fall behind on bills and end up in debt. Losing a job, taking on more purchases than you can afford, experiencing a major life change; Whichever it may be, one strategy to bounce back is through debt consolidation.
What is Debt Consolidation?
In a nutshell Debt consolidation is taking out a loan which pays off all your other debts. Now rather than having to make payments to multiple debtors, the payment process has been simplified to just one person.
I'm already in debt, you want me to take another loan?
One thing to remember is that not all debts are the same. Some carry higher interest charges than others. Credit cards can typically be around 18-25% while an auto loan could be from 0.9-5%.
Taking out a debt consolidation loan allows you to simplify the re-payment and can minimize the interest on those higher debts.
What do I need to do to get started?
The first step is to make a list of all of your debts and who you owe them to. Determine if it is a secured loan (such as an auto loan) or unsecured (like credit cards). Gather up the interest rates, monthly payments and lengths of the loans. With this information you can determine if debt consolidation will work for you.
Prioritize your debt
Once you have your list, you can determine which needs to be paid off first. Your highest priority will most likely be high interest credit cards.
Find a lender
Before you pick a lender, know your credit score. A bad credit history might make debt consolidation not worth your time.
Shop around for a lender. Some may offer you different rates as well, there are plenty of institutions to pick from.
Pay off your debt
Take the money you receive from the loan and pay off your other debtors immediately. Using that money for other things will only make things worse for your situation.
Debt consolidation is not for everyone
These are some basic guidelines to help you get out of debt. There may still be situations where it will not work for you. It's best to speak to a financial advisor to put a plan together and get a good solid timeframe when you can be debt-free again.
Network Advantage Card members have access to financial advisors to help with their specific situations. Find out how we can help you out.
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