Consolidate Debts

Consolidate Debts

Do you have a plan to consolidate debts? You probably need one, because your debts won't go away on their own.

How to Consolidate Debts

There are a few ways you can consolidate debts, most of which involve a professional debt management program. Is that a bad thing? No--in fact it's one of the smartest things you can do! Why? Because most of these plans can eliminate credit card debts in five years or less through super-low interest rates.

The most common way to consolidate debts is through a debt consolidation program. Through this program, a debt consolidation company contacts your creditors to get your interest rates reduced. Sometimes they can even get your balances reduced overall by getting past fees removed. Then they consolidate all your new, lower balances into one, and you make one affordable monthly payment to the debt consolidation company, which they divide among your creditors. Because of the low interest rates, you can be out of debt in five years.

There's also student loan debt consolidation, which is similar, but it only deals with your outstanding student loans. It combines them into a new loan with a much, much lower interest rate and extends the payments out over a longer period of time so that the amount of your monthly payment is reduced. No longer will your student loan payments interfere with your ability to have a life.

Now, the other two ways you can consolidate debts involve loans. Don't cringe--the interest rates on these loans are typically in the single digits! With a debt consolidation loan, this enables you to have the loan paid off in five years. The only thing is you need collateral. With a debt consolidation mortgage, the amount of the loan is added on to your mortgage, so it's the same interest rate as your mortgage payment. That means you get to write off some of that interest on your taxes--that's just an extra added bonus!

Whatever method you use to consolidate debts, realize that doing nothing at all about them means you will be stuck paying on them for a long time, but even worse--you'll end up paying a lot more in interest.