It’s that time of year again!
Spend less or get out of debt is the #3 most popular New Year’s resolution. See the complete list
Whether you’re getting a visit from the Ghost of Christmas Past Due we talked about last month, or just want to be better with money, spending, budgeting and financial planning, one of the first things you should consider is consolidationg credit card debt.
Consolidation, when you compile many different debts under one larger loan, often results in lower interest rates, and higher morale if paying a lot of bills each month makes you crazy!
If consolidation sounds good to you, you’ll find that there are many options and it will take a little searching until you find the right one for you.
Some things that you will have ton consider.
You want the best interest rate possible. Interest will vary depending on the current Federal Reserve rates, your credit score, your income, and the collateral you can put towards the debt.
You can consolidate Credit Cards under one new low interest credit card, or by using an equity line of credit.
When you take all of your bills and consolidate them into one credit card, you have two primary advantages. First, there are often balance transfer offers for 0% financing for a fixed amount of time, or low financing until the balance is paid.
Search for the best credit cards online to find a low interest card that will allow you to save money. If paying many bills a month is You will feel better once you have transferred your debt into one card and put them all together. You will have a better chance at getting rid of your debt and getting back on track.
Here’s the secret to using this strategy to get out of debt. Before you consolidate your cards, add up all of the required minimum monthly payments. Then after you consolidate, although your minimum payment will be lower, you want to still make the larger payment, that total of your minimum monthly payments from the unconsolidated debt (plus any other additional funds you can apply towards your credit card payment ) See, with the lower rate, you will be able to make higher payments and these payments are going to be applied to the balance of your debt.
Once you start paying on the credit cards that you have consolidated with, you will see that your payments are lowering your balance much faster than they would have if you hadn’t consolidated the cards.
Seeing your debt disappear faster will encourage you to put more money towards the payoff of the debt…resulting in a increased chance that this year, you’ll keep your resolution and get out of debt.
