Is Debt Consolidation My Only Option? What Else Can Be Done?

One thing that many people do when they have significant debt, is to use a debt consolidation service. What happens is that your debts will be bundled up into one payment with one company where you will then gradually pay it off to completely get out of debt and get control of your finances again. While there are advantages to this process, it can also significantly hurt your credit and make it harder to qualify for loans in the future. There are other steps to consider before going through this process.

Be more critical of your spending. You might have extra money that is wasted each month that you could put towards your high interests debts. Cut back on everything that you can. If you get even a hundred dollars of cut expenses, this helps significantly.

Sometimes you can refinance your debts in a different way to make things easier. One common practice is to take the equity in your home and borrow against it to pay off high interest debts like your credit cards. Talk to your bank about this option. You might be able to get everything on your mortgage payment instead of a debt consolidation company.

If you are struggling with credit card debt, there is a simple trick to get this back under control. Look for a balance transfer offer to a new card. Many times you might get a no interest deal for the first three or six months. During this time try to pay down the balance as best as you can. This saves money over the high interest rates you would otherwise be paying.

Earning extra money is another option as well. While it might not be fun to do this with your free time, it is an option that you might have to consider. Earn a few hundred a month extra in your spare time and it will help reduce your debt load.