Dealing with debt on your own can feel frustrating and at times, entirely overwhelming. For those who want to get out of debt as quickly as possible to avoid doing further damage to their credit scores and potential financial future.
There are various ways to consolidate debt that can be done without the help and assistance along the way. Consolidating debt on one’s own is possible with enough research and a clear understanding of the current financial situation they may find themselves in.
Before looking into debt consolidation tips and methods, it is vital to have an understanding of the current debt one is facing and the overall amount that they are actually in debt as well.
Understanding how much debt one is facing can help with making the decision on the route to take to help with clearing it up and getting one’s life back on track.
1. Home Refinancing
For homeowners who find themselves in debt, refinancing a mortgage for their home is a possibility to help with consolidating debt into one monthly payment and premium.
For anyone who is a homeowner and still owes money on their house, it is potentially possible to refinance the mortgage loan for more money, helping to consolidate any type of credit card debt one may have as well.
2. Lower Interest Credit Cards
Seeking a low interest credit card is an ideal method of consolidating debt, depending on the owed amount of debt and whether or not it is all credit card debt that one is trying to handle.
For those who are interested in using a low interest credit card, seeking out a card with the lowest possible interest can be done online from home and also by comparing card offers locally, depending on your offers, current credit score and location.
Obtaining a low interest credit card is a way to then transfer a balance of debts onto one card, oftentimes helping to instantaneously consolidate the debt that is being dealt with into one monthly lump sum payment that is due.
Credit cards that are low interest and allow users to transfer balance often require a minimum of at least a 2% to 5% of interest to be paid back in full of the overall balance and debts put into the card.
When you want to consolidate debt, it is important to determine all of the factors that are part of choosing the best method for relieving your own debt and financial struggles.
3. Equity Lines Of Credit
Lines of credit for homeowners can help with relieving debt and often allows borrowers to pay only interest for the first 10 years on the entire line of equity permitted based on the value of the home that is owned.
However, because the money loaned is surrounding one’s home and its current value, missed payments or delinquent payments can ultimately lead to the loss of the home altogether.
It is essential to understand one’s own capabilities, future outlook financially and the advantages to each available method of consolidating debt to getting life back on track.
4. Equity Loans
Getting a home equity loans are quite similar to lines of credit for homeowners, except the payback method varies.
When taking out a line of credit on the home, the overall balance of how much is borrowed, paid back and owed can vary and change throughout the entire time that the loan period is in existence.
However, with an equity loan, the money is given to the borrower and the borrower has a set amount of time to pay the loan back in full.
It is also possible to lose property and an entire home due to lack of payments if an equity loan is avoided or not taken care of during the payback period.
5. Peer To Peer Lending
Another option to consolidate debt is to look into getting a P2P loan. P2P loans, also known as “peer to peer loans”, are loans that are given from real individuals who are invested in consumer loans on their own for profit as the loaned money does not come from an institution itself or a bank.
Peer to peer lending can be done right from home online. Most often, P2P loans require the borrower to pay back the full amount of money loaned within a set amount of time, generally 3 years.
Using P2P loans can be limiting, as the loans themselves are limited to $25,000. However, it is potentially possible to be approved for 2 P2P loans simultaneously.