When it comes to talking about debt, it can be a taboo subject. Professionally speaking, it’s a perfectly normal issue in society.
If you don’t know how to deal with your spiraling debt, there are many businesses, organizations and individuals who can offer advice. If you’re not sure where to start, consider gathering all debt related paperwork and emails.
How You Consolidate
There are two primary ways in which you can consolidate your debt. A balance transfer credit card, or a fixed rate debt consolidation loan.
There are also home equity loans available or 401(k) loans.
With the balance transfer method, you transfer all your debts onto this card, and pay the balance in full during the promotional period. You will need either a good or excellent credit score to be able to sign up to this.
With a fixed rate debt consolidation loan, you will be able to instantly use the loan money to pay off the debt. Then all you need to do is pay back the loan in installments over an agreed term. These loans are more often available even if you have a bad or fair credit score.
When You Should Consider It
Consolidation can lower your loan payments if you get a lower rate or can pay off debts promptly. Gaining success with a consolidation strategy requires a few things.
The total of your debt, excluding mortgages, doesn’t exceed 40% of your gross income. Your credit score should be good enough that you’d be eligible for a 0% credit card, or at least a low-interest debt consolidation loan.
Currently, your cash flow should be consistently able to cover payments towards your debt and there should be a plan in place to prevent getting into further debt.
Many loan providers have a system in place for this, but some go even further. The Home Loan Expert offer a variety of adjustable and fixed-rate debt consolidation loans along with any term you’d like from 5-30 years.
These loans allow you to use the equity currently in your home to structure the new loan. Your overall debt will be lowered, you’ll pay cheaper monthly payments and importantly, and reduce stress in your life.
What Happens After
If you believe debt consolidation is for you, and you engage with it, then consider what you should do following completion.
If you’ve struggled in the past, consider speaking to a certified credit counselor or a financial planner who can look at your financials and make progress going forward.
A financial planner is responsible for their clients in more ways than just looking after their money.
They can look at investment opportunities, savings, budgets, insurance and tax strategies. As well as being able to check in regularly to evaluate current situations and plan for the future. They have many roles available to you, if you feel like you need the assistance.