How did you end up in debt? Was it something you never saw coming? Did it happen outside of your control? Do you want to know how you can fix it no matter how it began? The steps you need to take to use debt consolidation to fix your financial faux pas can be found below.
If you’re trying to pay down your debt, try borrowing a bit from your 401(k) or other employer-sponsored retirement account. Be careful with this, though. While you’re able to borrow from your retirement plan for low interest, failing to pay it back as you agreed, losing your job, or being unable to pay it all back, the loan will be considered dismemberment. Your taxes and penalties will then be assessed as for why funds were withdrawn early.
One sign that a debt consolidation company is reputable is whether or not they are a member of an organization, like the National Foundation for Credit Counseling. Even if the company verbally confirms to you that they are a member, make sure you still research it to make sure what they are saying is true. A member of an organization like the NFCC has to follow certain rules, like only employing certified credit counselors.
Consolidate all of your high interest credit cards onto one credit card with a reasonable interest level. If you’ve got multiple cards above 20% interest, you are paying way too much. That money going to interest could be helping you pay off that debt! Plus multiple cards means multiple minimum payments. It’s best to attack one card alone if you can.
To help you consolidate your debts consider borrowing against your 401k plan. Many employers allow employees to take a loan out against their retirement plans. One of the benefits to this is that you pay the money back to yourself. The interest rates are generally very low and the interest paid also goes back into your account.
Find out whether a debt consolidation company is a “home equity loan” provider in disguise. Some debt consolidation companies really just want you to take out a home equity loan. Don’t let this be you. After all, your home is the most important thing you have. If you find out a company wants you to take out a loan on your home, move on.
Know why you want to consolidate your debt. Is it because someone recommended it? Did you see a commercial on tv? It’s important to know your motivation, because debt consolidation is something that takes a great deal of responsibility. If you cannot come up with compelling reasons that you need to take this course of action, think again.
It’s important that you take the time to learn all you can about debt consolidation so that you can use it to deal with the debt which has built up. This article is a great start, and reading it in full will be a huge help. Go forward and seek out debt consolidation to help you be free of your burden.
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