Consolidating Debts

Consolidating debts is one of the most pragmatic ways to tackle your debts if it is viable for you to do so. You can do this is one of several ways:

Home Equity Line of Credit

If you have equity in your home, you may want to consider taking out a home equity line of credit (HELOC) for the amount that you owe. This allows you to pay off all of your debt, and make one payment over an extended period time, up to ten years. And, an additional benefit of a HELOC is that you can deduct the interest that you pay on your income taxes.

Zero Percent Credit Card

If you have received a 0% credit card offer in the mail (and it covers balance transfers) you may be able to transfer all of your outstanding debt to one credit card that has a low introductory APR for a period of time, saving yourself money on interest and simplifying your finances.

Debt Consolidation Loan

A debt consolidation loan is a loan that you take out, generally with a third party company. They pay off all of your outstanding debt, and in turn, you make just one payment a month, to them.

Depending on your situation, there are risks and benefits to consolidating your debt. But, the key to making these debt reduction strategies work is your financial discipline and determination to not create new debt- otherwise you may end up in a worse position than before, with even fewer options.