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Debt Consolidation

Debt Consolidation
This time a year, we often find ourselves realizing that in the spirit of generosity toward our family and friends we’ve spent more than we earn.
This is where one might consider debt consolidation. Consolidating bills is when you acquire a singular debt in order to pay off your various bills. By doing this, you combine all of your debts with their varying interest rates, into one balance with a single interest rate. So, if you have some bills that have higher interest rates, you can eliminate the compounding interest by consolidating into a lower or no interest rate. Another perk to consolidating is how it simplifies your life by having only one payment at one time of the month vs. having many payments at several times of the month.
Options for Consolidating
Be sure you factor in the cost of fees, find low rates and pick a short term loan. These tips will ensure that you don't end up spending more by consolidating.
  • Refinancing your home mortgage - using the equity to pay off bills is very appealing, however the cost to refinance should be considered, especially if you aren't getting a better rate on your mortgage.
  • Home equity loans/lines of credit – this form of consolidating can be used with little or no fees. The rates tend to be higher, but for smaller amounts this can be a less expensive option in the end.
  • Personal loans – the rates still beat high interest credit cards and the loan doesn’t show up on your credit report.
  • Consolidating high interest debt first - consolidate part of your debt by paying off the accounts with the highest interest rates. For example, student loans often offer very low interest rates, so perhaps focus your attention on other higher interest rate bills to consolidate in order to get ahead.
  • Credit Cards - consolidate your debt onto a single 0% interest or low interest credit card and then make double payments to ensure you're paying down the principle of your credit card debt. Negotiate with your credit card companies to find the lowest rate.
Consolidating your debt is an opportunity to realize how important it is to live within your means and become more financially savvy in the process.
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Marianne Snygg, GRI, ABR, ASP
Broker Associate
ERA Herman Group Real Estate

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Colorado Springs and Monument Real Estate

Comment balloon 0 comments • Marianne Snygg • November 17 2008 11:49AM

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