Being in debt is not only financially stressful, but it can also leave you feeling out of control and hopeless. It’s particularly challenging when you have no foreseeable plan to alleviate it.
The best way to deal with debt is to be proactive and to not let it accumulate over time. Instead of allowing your debt to dictate the way you live your life, consider consolidating your debt. Debt consolidation will decrease the money you owe and it will help put you back on track for maintaining healthy finances.
Keep reading to find out the best ways to consolidate your debt.
Contact a Family Member Who Can Lend You Some Money
Borrowing money from a family member is always the best option to lessen your debt. Not only is it the cheapest option, but with a large amount of money from your relatives, you’ll be able to make a huge dent on your debt or completely pay it off. Plus, you won’t have to deal with financial institutions and the possibility of not getting approved, high-interest rates, or taking a hit on your credit score.
When borrowing from family it’s important to treat the loan like any other loan by being on-time with payments and being honest about how long it will take you to repay them. It’s easy to take advantage of the generosity of family members as they are usually more than happy to help you out, but don’t mistake this loan as a handout. In order to keep a healthy relationship with your family, you need to be respectful about the loan and to pay back your debt.
Contact a Nonprofit Credit Counselling Organization
The primary objective of nonprofit credit counseling companies is to help you find sustainable solutions to your debt troubles. To help alleviate your debt, they’ll provide you with all the free resources you’ll need.
When you meet with your credit counselor, be upfront about what caused you to go into debt and what your financial goals are for the future. Openness and honesty will allow your credit counselor to create a results-oriented plan to help you decrease your debt as quickly as possible. According to Debt.org, most debt management programs are designed to assist you to pay off your outstanding debts in three to five years.
Credit counselors will help you get your finances in order by advising you about your poor spending habits to help you stay debt-free in the future.
Get a Balance Transfer Credit Card
The best way to reduce credit card debts is to use a balance transfer credit card to consolidate it in one place. One of the many advantages to opening a new credit card is there’s little or no interest for many months and the payments you make on the card are used towards the outstanding debt balance.
Managing one card instead of multiple cards is an efficient way to simplify repayment strategies as it can help you get out of the debt zone more easily with less effort. But, before deciding to open a new card, it’s important to research balance credit cards as some cards can be more costly when you consider factors like annual fee, initial transfer fee, and the regular interest fee if you don’t get rid of your debt during the no-interest period.
Borrow Against Your Investments
Your assets can be used to get loans for debt consolidation and you can borrow against them and consolidate your debt with either secured loans or unsecured loans.
Secured loans are best especially if you have a bad credit score. The lender stands to claim your valuable asset should you default. This way, the lender can recoup their money without any dispute. Since the loan is secured, it means you can borrow a big amount of money with very little interest. Secured loans utilize investments like cars, real estate, insurance policies, and other collectibles as collateral. Keep in mind that you’re liable to relinquish your assets should you fail to pay back the loan.
Unsecured loans are given based on credit history and income. You’ll need a cosigner who will agree to pay off the loan if you fail to do it.
Consolidate Your Debts For Your Financial Health
Debt consolidation is an efficient way to ease repayment. Not only does it lessen your financial burden, but it relieves the stress that comes with being in debt.
A credit counselor, a family member, a balance card, or borrowing against your investments will help you achieve financial stability, while you learn the necessary skills to become more financially responsible moving forward. If you have the financial means to make the payments on time, debt consolidation is the solution to your financial issues.