How to Consolidate My Own Debt
Debt or bill consolidation offers a simplified way to manage credit cards and other loan payments. Many consumers deal with several creditors a month, which results in different due dates and payment amounts. To simplify things, they choose a debt consolidation to merge outstanding balances into one loan or account. Debt consolidation agencies are available to combine debts. However, these services tend to involve fees. Rather than pay for a consolidation, consider ways to consolidate debt on your own.
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Instructions
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Determine how much you owe. Find your credit card and loan statements and calculate your debt total. Look at your interest rate; and if paying a high rate, aim for a consolidation option that features a lower interest rate than what you're currently paying. This lowers your payment, and more of your money goes toward bringing down your balance.
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Consolidate with a bank or credit union loan. Talk to a loan officer to see if you can receive a secured debt consolidation loan. Request a specific loan amount to consolidation debt, and be prepared to pledge collateral (car, jewelery, electronics) to secure the loan.
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Tap into your equity. A low interest rate home equity loan can help you consolidate your debts, and with a low rate you'll enjoy lower payments with a fixed term. Speak with your lender to apply for an equity loan. Pay off your outstanding debts with the funds.
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Use a credit card. Some credit cards have interest rates that are 20 percent or higher, which increase minimum payments and make debt elimination difficult. Look into low interest credit cards with a balance transfer feature. Once approved, move your high-interest balances to the lower-interest card.
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Refinance your home loan. A mortgage refinance can reduce your home interest rate, and depending on your equity, you can take a cash-out feature and borrow money to consolidate bills. Lenders wrap the borrowed amount into your new mortgage balance.
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References
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