Consolidate Your Debt
Filed under: Manage Your Money — Gloria and Alpha @ 1:00 am
This is a concept that may seem pretty simplistic, but it’s one of the main ways you can really start to reduce your debt.
The first step is calculating how much debt you actually have, and the sources of it. It’s not a pleasant process, but extremely necessary. Make a list of what debt you have and with whom the debt is sitting with.
If it’s predominantly on credit cards, you can often open a new credit card and the transferred balances incur a lower rate of interest for an introductory period.
Keep your eye out for these types of deals, as they will accelerate your debt reduction process.
A very important aspect to this however is to then CANCEL all those credit cards you previously had balances with. Remove the temptation. You will feel lighter, and it will also improve your future credit prospects.
Likewise, if you have a home loan, and there is some equity in your property, you may be able to increase your home loan to pay off all your credit cards. The interest rate on a home loan is generally substantially lower than credit card interest rates, and it also simplifies the repayment process, as you only have one bill to pay off at the end of the month.
Again, the important caveat to this is cancelling the cards that have been paid out. Just keep one (or possibly two) credit cards, and ensure they have a low credit limit.
This is also not a strategy to repeat every other month. Be disciplined. Do it once and learn from your spending mistakes.
Getting into debt can happen without you really notice it, so take steps to reduce the debt and move on. There’s no need to dwell on the process and spiral into a depressive state. This may sound easier in theory then practice, but we’ve all been there at some point or another. Learn from the lesson and don’t let a state of debt define you.
More Information on Eliminating Debt