We’ve learned about good debt and bad debt. We’ve examined why a healthy debt-to-income ratio is crucial when applying for a loan. Now, in part four of our series, we’re going to look at the many approaches you can take to getting out of debt. Note: There is no instant cure for getting yourself out of debt. If you simply decide to default on your bills, your credit score will suffer for many years to come. Don’t shoot yourself in the foot financially. Instead, let’s look at some strategies for getting your bills paid off.
Debt consolidation is one popular choice for people who have too much debt. By combining your debt into a single monthly payment with low interest, you’re spending less money and making it easier to afford your everyday necessities. Debt can be consolidated through loans, 0% interest credit cards, or debt repayment programs.
Debt consolidation loans can be obtained through your bank or credit union. They’re a good choice for folks with a moderate debt load. If you’ve been a good customer for many years, you might still be able to secure a loan even with a high debt ratio. The point of getting a debt consolidation loan is to get enough money to pay off your debts. Then you repay the loan over a course of years, at a much lower rate of interest than your original debts (especially credit card debts) were accumulating. If you want to maximize your chance of getting approved for a debt consolidation loan, pay off some of your debt before you apply.
Another option is to move your debt to a 0% interest credit card. This is a good choice for people with less than $10,000 in debt, and with credit scores that qualify them for good cards. When you pay off your debts using one of these credit cards, you typically have one year to enjoy the 0% interest phase. For that reason, you must be certain that you can pay off your balance within a year. After that, your balance will be subject to interest – sometimes at an even higher rate than your original debt!
Those with heavy debt burdens could look into debt repayment programs and credit counseling. Just be aware that there are some organizations who will take your money and not deliver on their promises to negotiate better terms for your debt repayment. Others require you to avoid taking on more debt while you’re enrolled in the system. They’re not for everyone, but these programs have helped many deeply indebted people.
Want to learn more about debt repayment and how you can tell the legitimate programs from the swindlers? Check out our free 15-page report, ‘Know Where to Draw the Line on Debt’. It’s full of information, calculations, tips and tricks for keeping your debt in check. This report is offered to our readers as a thank-you for visiting quicklyoutofdebt.com.