Anyone saddled with massive debt will tell you that being in debt is not only no fun, it can be downright painful. Carrying too much debt can occupy your thoughts to the point where your relationships, your ability to focus at work, and your free time can suffer greatly. Here are 5 things people considering debt consolidation and debt management who have bad credit should do:
Point one: determine how much you owe with a free debt calculator:
Do an online search using the keyword “debt consolidation calculator” and follow the steps. Good calculators will give you the option of calculating what it takes to get out of debt. The first option allows you to ask the calculator how long it will take to pay off your debt (given the monthly payments you’re willing to make, the current interest rates on your loans, and your current balances). This is the way to go if you’re on a relatively fixed income and just want to know how long you have before you’re debt free.
The second option allows you to ask the calculator how much money in monthly payments will be required to pay off your debt within a certain number of months or years. This is the best option if you are trying to get out of debt at a certain time, such as an upcoming wedding, the birth of a child, a move, or a job change.
Point two: Try a free online counseling service:
There are a number of free and reputable online communities through which people with large debts can connect with experts who can help them find the best way to get out of debt. These services work in several ways, one of which is for you to post your questions about getting out of debt online and see what kind of answers you get. And it can be helpful to simply read questions from other people like you who are in debt and how they are dealing with their debt.
Point three: Find out if a debt consolidation loan is right for you:
While a debt consolidation loan isn’t right for everyone, it is an option worth looking into. Here’s how it works: You sign up with a consolidation loan specialist who walks you through their offers step-by-step. They are used to dealing with people in your place, and will treat you with respect given the delicate situation you find yourself in. The service will offer to pay all of your current creditors in exchange for a single loan that will have a lower interest rate than most of your existing debt, such as credit cards, medical bills, department store cards, student loans, and home loans. personal. . As a bonus, consolidators will take care of communicating with your creditors on your behalf, so you no longer need to deal with them (or collection officers!).
As a word of caution, keep in mind that debt consolidators will often try to set up a very long-term loan that can take a long time to pay off. In addition, you may be required to set up a secured loan whereby you put up your home or other items of value as collateral. Also, any time you are dealing with large amounts of money, as is the case with debt consolidation, it is best to check the reputation of the debt consolidation service. For example, check with the Better Business Bureau in your area and choose from a list of member businesses.
Point four: Take advantage of low-interest and no-interest credit cards:
While you’re in the process of determining if debt consolidation is right for you, a smart short-term solution to your debt situation is to transfer your high-interest credit card debt to low-interest credit cards. This is a great way to save up to $100 per month in interest payments, allowing you to shift any excess income you have toward paying down loan principal or outstanding bills. Try to avoid cards that charge you high balance transfer fees or that charge an annual fee, as those fees will eat away at some of the advantage you’re enjoying by switching your debt from those high-interest cards.
Article five: Improve your credit score:
A stellar credit score and being debt free go hand in hand, which is not good news for people with low credit scores and a lot of debt. As you know, your credit score (FICO) ranges from 0 (no credit) to 850 (perfect credit score), and anything above 750 is considered excellent. Fortunately, there are proven ways to increase your credit score by 100 to 200 points or more in periods as short as 3 months or less. To improve your credit score, start by understanding how the credit bureaus calculate your score and how to improve it. Then, start improving your credit score: An improvement of even 50 points can save you $1,000 per year in interest payments, which can put you on the path to being debt-free much faster.
Debt consolidation and debt management can be very smart moves for the savvy man, woman, or family saddled with too much debt. By doing a little homework now and taking the right steps, in a month or so you can be on your way to a much healthier financial future.