If you’re struggling with consumer debt (meaning credit cards, loans, etc.), you may be looking for a solution that won’t damage your credit further and won’t cost you an arm and a leg. You may have seen the debt consolidation commercials on television and asked yourself if there was a better way? I mean, debt consolidation seems pretty straight forward – you roll all of your debts into one loan that has a lower interest rate, thus making everything more affordable.
However, it is not as easy as it sounds to do it yourself. First, you must still usually have good credit in order to have any do-it-yourself options available. Second, even by consolidating your debt into one lower interest rate debt, you may still have to make other personal finance changes to make the payment affordable.
Do It Yourself Debt Consolidation Options
If you do decide to try to consolidate your own debt, here are the basic options:
- Credit Card Balance Transfers: Many credit cards offer lower or 0% interest rates for balance transfers for a specified period of time (usually about one year). If you are able to qualify for this type of card, transferring your balances to it can save you interest, and also buy you time to pay down the principal before your 0% period runs out. Some people even string together several 0% cards together – once the first card’s period runs out, you transfer the balance to the second card.
- Home Equity Lines of Credit: If you have equity in your home, you may qualify for a home equity loan. Since interest rates on mortgages are at all time loans, home equity lines also have very low rates. Furthermore, the interest paid on these loans is tax deductible for most individuals, which provides some added savings. However, if you don’t already have a home equity line, it can be expensive to get one, since banks may charge consumers for appraisals or other fees associated with opening the new line of credit.
These are just a couple options available. If they aren’t for you, you may want to find a financial planner or credit counselor to help you with your situation.
