Mortgage, cell phone, car payment, insurance, cable, utilities, and other loans can add up and make it hard to keep track of everything. Before you know it, you feel like all you do is pay bills and that the things you own control you. It seems like a cycle that never ends and keeps getting worse. One way to keep this from getting out of hand is to combine your debt. There are a few ways to save money on your debts by putting them all into one big payment.
You can use credit cards to consolidate. The goal is to look at all of the credit cards you already have and try to find the one with the lowest interest rate. After you find the issuer with the lowest rate, try to move all of your balances to that one card. You'll have one big balance instead of ten medium-sized ones, and each month you'll only have to make one payment. You can also apply for a new card and make a transfer so that you only have two cards, each with its own payoff. But be careful when you try to get new cards. Your credit score can go down if you use too much credit.
You can also get a loan against the value of your home. With this type of loan, you can borrow a set amount of money based on the value of your home for a set amount of time. Most of the time, these loans will have lower rates and lower payments, and if you itemise your taxes, you may be able to deduct the amount of the loan. You could also refinance your home and get money out of it to pay some of your bills. There is also something called a "personal security loan" that is a type of loan. This loan can be hard to get because you are the only thing you can offer as a guarantee. Since these loans are riskier, they are likely to cost more, and you will probably have to pay them back over an average of 10 to 15 years. If you already have a lot of debt, it may be harder to get a personal loan.
You can talk to a credit counsellor about your debt, but they won't consolidate it for you. Instead, they'll set up a payment plan that you can stick to. You'll send one payment to the credit agency, and they'll pay your bills for you. But most don't do it for free, so make sure you can't get your act together before hiring a pro.
Many people today choose to have a debt settlement company talk to their creditors for them. If you choose this option, you stop paying your bills, and your creditors call the company that is helping you settle your debts instead of you. Then, the two sides will talk about how to lower your balances, sometimes by as much as 50 percent. People often find that this option gets them out of debt in two years.
When you're in debt, keep in mind that you're not the first or the last person to be in a tight spot. Before your debt completely takes over your life, look into some of the more common ways to handle your money. Try to find people who have been through what you are going through and find out what they did to get out of debt.
