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Are all the offers around to help people with debt consolidation just great sounding scams? After all, every person in debt got there by themselves, why can’t they get out just as well? One thing everyone needs to know about debt. Just as one single purchase of loan didn’t start the debt nightmare, one financial move isn’t going to end it, unless of course you pick the Mega millions lottery numbers, and you know the odds there.
Consolidating your debt can be accomplished by yourself simply by reversing the process that got you into debt in the first place. Try some of the suggestions below and see how they work in your case.
- If you have a large outstanding credit card balance, on several cards, pick the card with the lowest interest and use it to pay off the other cards. Once you have done this cut up the other cards and only use the one for emergencies.
- Use short term, low interest loans to avoid bankruptcy. This is a last resort, only if you are on the verge of filing.
- If you have equity in your home and your bank charges a lower rate than your one credit card, take out a mortgage on the home and pay off the rest of your debt
The secret here is simple. You want to get your debts down to one payment, with the lowest interest possible. Finding funding sources at the lowest interest rates and trimming down the number of payments that you have to deal with is the way to a much less arduous time in getting your debt under control. Most debt comes not from the original purchase or loan. Most debt comes from interest. If you carry a $5,000 balance on a credit card with 20% interest, $1,000 of that debt is pure interest. Switching to a card that offers 10% can save you $500 right off the bat.
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