Nearly everyone falls into debt at some point of time or the other. The important thing is not to let it bring you down or leave you feeling helpless. There is always a way out – more than one, in fact, as this article will show you.
Remember that debt consolidation can not only reduce the money you owe, but also set you on the track towards financial stability. So let’s get started.
1. Borrow from a family member
If you have relatives who can afford to lend you money, don’t let pride stop you. These are uncertain times we live in. Your parents might have been able to afford down payment on a house by the time they were in their mid-30s but the economy is very different now. Borrowing from a family member cuts a lot of inconvenience out. It’s the cheapest way to start repaying your existing debt, you don’t need approval by a financial institution, you won’t have to worry about your credit score or interest rates.
Keep in mind that this is a loan, not a gift. Make your payments on time and be absolutely transparent with the family member you’ve borrowed from – otherwise your relationship will be affected and you will lose credibility with the people you love best.
2. Try non-profit credit counselling
An affordable way to learn how to manage your finances better, a non-profit credit counselling company will also give you free access to resources that can help you. Remember that their main objective is to help you find the best way out of your situation. Your counsellor will only be able to help you if you are completely honest with them. You will be expected to discuss not just your current financial situation, but also your financial goals – a plan will be taped out for you accordingly. You should be debt-free in about three to five years, and the lessons your program will teach you should ensure that you never worry about falling into debt again.
3. Credit card balance transfers
Struggling with credit card debt? Try consolidating it all in one place. A balance transfer credit card will help you do that. One of the benefits is you have to pay little or no interest for the first few months after getting one, and the payments you make will go towards your outstanding balance. The entire procedure is designed to simplify your repayment plan. It’s easier to manage one card and one debt amount, as opposed to multiple. Be careful though. Some balance transfer cards can, through initial transfer fees and annual fees, end up costing you more than you expected. Do your research carefully and talk to a trusted financial advisor before getting a card. Debt consolidation is recommended because, well, it works. It makes repayment easier and quicker, and provides emotional relief as well as financial. As long as you can afford to make consistent payments – and nearly everyone can with some basic budgeting – you’ll be just fine.
4. Apply for a personal loan
The funds from a personal loan can be used to pay off your debt. You’ll still have to pay the amount you owe on the loan, but instead of multiple payments you’ll be making a single one. If you have decent credit, you may qualify for a lower interest rate than the rates your credit card company is charging. In addition, personal loans tend to have more flexible repayment options. A personal loan isn’t the right option for everyone though, especially if you have a bad credit score. Do your research carefully before choosing this option. Debt consolidation is recommended because, well, it works. It makes repayment easier and quicker, and provides emotional relief as well as financial. As long as you can afford to make consistent payments – and nearly everyone can with some basic budgeting – you’ll be just fine.