Consolidate Your Debts
It’s entirely possible to pay off your debts yourself and reduce your balances for good. To succeed in this, you’ll have to pay your debts one at a time. Initially, you can begin with working on high interest rate credit cards while making minimum payments for other credit cards alongside. This is popularly known as the debt stacking method. It’s beneficial in long run as it will help you to save a lot of money. But at the same time, if the high interest credit card has a large balance, it might take a lot of time to pay it off.
The second method is the debt snowball method. In this method you start by paying off the lower credit card debts first. This would help you in paying your credit cards quickly and utilizing the extra money for paying off the second lowest balance. The process goes on until the payments are done away. However, it’s quite difficult to stay on a particular schedule to manage the debt payments. You may have to curtail your budget, which you might not be willing to do.
The second way to consolidate the debts is through debt consolidation loans. You can get a personal loan or a homeowner loan .If you are a homeowner or you own equity in a house, you can apply for a homeowner loan. The amount of the loan can be used to pay off all your debts. You will have to make a single monthly payment which would be less than your current payments. One of the loans may have a lower interest rate as compared to the average of one’s you’re currently paying.
If you’re not a homeowner or do not own equity in a home, you may apply for an unsecured loan. Unsecured loans do not require any security. These loans have higher rate of interest in comparison to secured loans. If you’re in excessive debt, you might face difficulty in getting these loans. Using this strategy, you can pay off your multiple debts quickly. However, debt consolidation may land you in a big problem if you are not careful. You may end up paying more than if you had not opted for debt consolidation loans.
So, you should understand and compare the different types of consolidation loans and accordingly choose the right one that suits you the best. The easiest way to find a suitable option is to compare the total costs and choose accordingly.
If you have multiple high interest credit cards, you have another solution that is to make a balance transfer. The balance card transfer involves applying for a high limit credit card with low interest. The low interest new credit card allows you to consolidate your existing credit card debts into a single debt. This will help you to pay off your debts at a low rate for a given amount of time.Some balance transfer cards offer promotional rates which are as low as 0%. A better idea is to transfer all your debts into a 0% interest balance transfer cards, which would give you a certain time frame ranging from 6 to 18 months during which you don’t have to make any interest payments. This would reduce your payments and make you debt free even before the end of promotional period. You should make sure that you read the fine print before signing up for the new credit card application.However, once your promotional period ends, your rate of interest may be subject to change. So, you should keep a check on what your interest rate would be before the end of your promotional period. If you fail to pay your debts during the promotional period, you may end up paying the same amount that you would have paid before transferring your balance. Balance transfer cards is a suitable option if you have high interest rate debts and the capability to pay them off within the promotional period.
One of the ways to pay your credit card debts is debt settlement. It’s a better option as compared to debt consolidation loan or balance transfer as it reduces the amount of debt you owe. This method is quite simple as you just have to contact your creditors and offer them the settlement which is usually less than what you actually owe. You should have proper documents to state that you are suffering from financial difficulties so that the creditors agree to settle for a less.You need to have a proper list of your assets and earnings. This will help you in proving your inability to repay the debt. If negotiation does not work out, the last resort would be to file for bankruptcy. You must have good negotiating skills and secondly you must also have proper cash in hand to pay for the debts, if debt settlement works out.