Tips for debt consolidation
8:24 PM
So, you're thinking of consolidating your debt?
Good idea. And a smart one.
Many people don't realize the amount of money they could save just by consolidating some of their debt.
My husband and I are wanting to start a family soon so we jumped on the bandwagon. This happened to be a smarter idea than I could have possibly comprehended at the time. Not only will this simple re-purposing of funds help us financially for our future family.. this has also helped us tremendously with my recent layoff.
Consolidation options:
1. Retirement.
- This is one of the things that I decided to do. A lot of times people don't realize that this is an option. You're not necessarily taking out money from your retirement. This is a loan against your retirement. I had a nice little cushion of $5,000.00 in my retirement. The way my plan worked was that I was only able to take out half. It was enough to pay off my credit cards. My credit card was at a 24% interest rate. My loan consolidation was 4%. BIG DIFFERENCE. Putting them together made my note lower as well. Saved about 60$ a month just on my cards.
2. Loans.
- A lot of banks offer debt consolidation loans at reasonable interest rates. After paying off my credit cards we moved onto my husbands. He didn't have a retirement like I did but his debt was definitely high. We went to our local bank and applied for a consolidation loan. We got approved for an 11%. Its not as low as my retirement but Its still lower than his 24% interest rate on his card.
3. Credit card transfer.
-There are a good bit of cards out there that offer no interest for the first 18 months and we can. We weren't able to do this because our debt to income ration was too high. But this is definitely an option for some people. You can transfer your balance and pay it down without worrying bout interest. Once you get close to the end of your interest free period you can transfer it again.
Doing a few of these tips has saved me and my husband more than 150$ a month. And they will be paid off faster and for a lower interest. This savings is whats helping us quite a bit since being laid off. But any savings is good savings.
My hiccup this times was letting the debt getting out of control to being with. But I've put on my big girl panties and made smart choices to get it under control. Even when things seem out of control break it down and find a solution.
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