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There are several ways to tackle your debt.  However, before you run out and get one of those “fast and easy” personal loans to dig yourself out; hear me out.  The sound of one easy payment per month may sound like the answer to your prayers but beware of the quick fix schemes.  A lot of these “Consolidation Loans” have enormous interest rates and put you paying twice as much as you would if you just worked at it yourself!  However, there are some options to consolidating your debt to dig out of the hole speedier and for less cost.

If you have a decent credit score (above 700 according to you can apply for an unsecured personal loan to consolidate your credit cards, medical bills, etc. into one easy payment.  However, it depends on the amount you owe on whether you get approved.  Unsecured loans are risky for the lender, but if you’re not too far in the hole this is a quick easy way to resolve your debt.

Another way is to get a special credit card rate of 0% APR on balance transfers.  You will transfer all your balances from your other cards to this one and knock out the principal rather than just paying interest for years.  Beware of hidden fees such as an annual fee or percentage of making the transfers.  Always read the fine print when it comes to any financial decision!

If you own your own home you can always tap into your equity.  The two options to do this would be:

1.    Open a Home Equity Line of Credit: This is a great option if you want an option to borrow against when things come up.  It’s like a credit card but you are using the equity in your home as collateral.  You can pay the balance off and leave it open for rainy days.  The good thing is the interest rate is lower than a credit card, so even more savings there.

2.    Refinance with Cash Out:  This process is taking your existing loan and refinancing it into another loan with a chunk of cash out.  This is a good option if your rate is higher and the rates are lower now, if you are paying PMI (we’ll talk about this later), or if you just need a one-time bailout of cash flow.  Be aware of closing costs and be sure your new payment is less than your total debt now.

Pros of Debt Consolidation:
•    Lower Monthly Payment
•    Pay off Debt Faster
•    1 Easy Payment

Check out this post on ” Best Home Equity Loans: Where to Find Them & How They Work” for a helpful in-depth guide on Home Equity Loans.

I want to warn you about Debt Consolidation Offers you receive in the mail.  Now I am not saying all of them are bad, but you really need to look at the big picture.  It may seem like a fast-easy answer but look at the total you will be paying in the end.  I took a picture of the one I received recently.  This is for a personal loan so the APR should be less than an average credit card.  It is 29.49%!  The loan amount was $7000.00 and the interest to be paid back was a WHOPPING $4,998.08!!!  I’d be paying almost in interest what I would have borrowed, to begin with.  This is a big NO GO.  By the way, my credit score is over 700, so the interest rate is ridiculous considering that as well.

A few years ago a friend of mine checked into a Debt Consolidating company.  They told her to stop paying her bills.  DO NOT DO THIS.  They were going to let them go into collections and settle for a less amount, or so I assume that was the plan of action.  It’s better to go slow than not at all, so keep that in mind.  If you are unable to do the tips for consolidating with good benefits then just use the advice from my first post about budgeting.  Even an extra $20 here and there on the balance will be better than the minimums.

Cons of Debt Consolidation:
•    Can be a higher interest rate (if not properly researched)
•    Credit Score can impact approval, rates, etc.

In the end, the goal is to make your life easier but also not put more financial stress on yourself.  You want more money in your pocket, not others.

Tips & Resources:
Debt Consolidation Calculator by Bank-Rate:
Home Equity Specials List by Consumer Advocate:

Best Home Equity Loans: Where to Find Them & How They Work