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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, be aware of the Pros & Cons of consolidating your debt. 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, if you consolidate debt the right way, you can dig out of the hole speedier and for less cost. Check out the following options for help with debt consolidation.



Unsecured Loans


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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. You can check with your current lender to see if they offer these types of loans.


Secured Loans



Secured Loans are usually easier to qualify for because it is less risk to the lender. For instance, if you own your vehicle free & clear, you may get a secured loan by using the vehicle as collateral. The loan is then based on the value of the vehicle, and the rates can be lower depending on the age, make, and model of the vehicle. This may give you a better interest rate than an Unsecured Loan and save you even more money on interest.


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Special Rate Credit Cards


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Another way to consolidate your debt 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!


Tap Into Your Home Equity


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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 an excellent option if you want an opportunity 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.


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.


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The Pros & Cons of Debt Consolidation


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When you are considering whether or not to consolidate your debt it’s best to review the pros and cons first. By taking the time to research your options and doing it right it may save you money and make your monthly budget easier.



  • Lower Monthly Payment

  • Pay Off Debt Faster

  • 1 Easy Payment


  • Can be a Higher Interest Rate (If Not Properly Researched)

  • Credit Score Can Impact Approval, Rates, Etc.


Beware of High-Interest Loans


Before you sign on the dotted line, beware of high-interest loans or prepayment penalties. It may seem like a fast-easy answer, but look at the total you will be paying in the end. You may receive offers in the mail, but be sure to check what the Annual Percentage Rate before applying. Many offer fast loans, but the APR is around 25-30%.

On a loan amount of $7000.00, with an interest rate of 29% for five years, the interest to be paid back is $6,331.59! You can use a Debt Consolidation Calculator to ensure you are making the right decision.


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Do It Right & Budget


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Remember, it’s better to go slow than not at all, so keep that in mind.  If you are unable to consolidate your debt the right way and save money, then check out my post How to Get On A Budget.  Even an extra $20 here and there on the balance will be better than the minimums.

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