- 1). Figure your exact amount of debt. Check your credit report to make sure you have included all outstanding accounts. Write it on paper or print it out. List all your revolving debt and debts already closed. Credit cards, car and home loans and personal debts should all be included. Besides total debt, include information like interest rates and monthly payments.
- 2). Take a look at where the majority of your debt is and how it is you got to that point. Is there a problem in some area? If so, you will need to address those issues or the problems will repeat themselves. Cleaning up your debt and credit report but not addressing any spending addictions will only have you in the same position a few years down the road.
- 3). The whole idea behind debt consolidation is to move the debt from one lender with high interest to another with a lower interest rate, thereby making it easier to pay off. This can be tricky as interest rates rise and descend. For instance, you could move all your debts to one credit card with a 9 percent interest rate only to find later that was only the introductory rate and the actual interest rate, 12 percent, comes 90 days later.
- 4). Look into loans. If a credit card debt transfer is not an option, you may be able to get a loan from a lending institution with collateral. Consider putting up your house or car as a piece of collateral. It is important that the loan has a lower interest rate than the existing loans. It is also important to have the monthly payment low enough to be able to pay it each month with no problem.
- 5). Consider borrowing money from a trusted family member. This way you may even be able to pay the loan back at no interest at all. If you go this route, make sure that you pay back every penny. Financial disagreements in a family relationship are never good.
previous post