Finance

Partners

28.06.21

 

Tips for Consolidating and Eliminating Debt

 

Dealing with Banks

Debt vs. Equity

    

 

Being in debt can be a very confusing, intimidating, and frustrating situation. Take a look at some of our tips to help consolidate and eliminate your debt.

Large amounts of debt can seem impossible to pay off. Millions of people are in debt, so you're not alone, but that doesn't make it feel any better.

 

The nice thing is, there are surefire ways to improve your debt without changing too much of your life in the process. Eliminating debt is probably the best thing you can do for your long-term financial health, and we're here to give you some ideas on how to do just that.

Eliminating Debt: How to Get Out of the Hole

Regardless of the kind of debt you have, it's possible to get out even if your income is lacking a little bit. That said, different forms of debt warrant different solutions. Generally, the way to approach paying off your debt by looking at the various interest rates and penalties that you're up against.

Many people have some credit card debt coupled with a heaping mound of student loan debt. It's not uncommon to have two sources of debt that need to be repaid with varying interest rates.

In those instances, you should look at the interest rates and projected growth of those loans over time and compare them. Look to see if it's smarter to repay one loan first, rather than paying each gradually and allowing two interests to pile up.

It's a good idea to map out the growth of your debts because it provides you with a specific look at the situation. When we can't see the specifics, our anxiety mounds and we're less likely to take action.

Once you have that map laid out in front of you, you can reference it against your actual life and financial situation. This way, you'll know whether you can conceivably make the payments you have to, and adjust your repayment plan if those payments aren't possible.

Consolidation

One of the most effective debt solutions for people with multiple loans is called consolidation.
Basically, consolidation means taking multiple loans of different interest rates and paying for them all at once with one large loan that has a smaller interest rate. So, instead of three loans with rates of 6%, 9%, and 11%, you have just one loan with a 5% interest rate.
Additionally, you skip the various repayment dates, late fees, phone calls, and emails concerning your bills. It's simply a way to make all of the factors of your debt a little more streamlined and cheaper in the long run.

Consolidation shouldn't be taken lightly, though. It's important to look at all of your options, examine the monthly costs and how they'll run their course, and even speak to a financial planner if you can.

It's possible to be taken advantage of when you're trying to consolidate, so make sure that you're doing the absolute smartest and safest thing.

All that said, consolidation can take years off the repayment plan of your loans and save you from throwing money away to excessive interest.

Want to Get Debt Free?

Eliminating your loans is your goal, and we're here to help you get there. There are a lot of things that a person can do to chip away at those loans and make strides toward financial freedom.

If you're interested in more financial tips and tricks, visit our site for the information you need.