When you have excessive outstanding balances, wriggling out of debt may not be the easiest thing to do. However, a useful strategy is to consolidate your debt into one loan, with lower interest. You have to be creative as it may be difficult to get a loan especially when your credit history has taken a hit due to excessive debt.
However, there are still plenty of options. Instead of going for traditional consolidation loans, it will be a good idea to use credit cards, loans from relatives, loan drawn on a retirement policy, insurance policy or on home equity for the consolidation.While some of these options could prove helpful, they could prove tricky too.
The trick is to consolidate in such a manner so that you can repay the entire loan amount in 4 to 5 years and to resist the temptation or bad habit of adding to your debt. For example, a $5000 loan at 11% will need a payment of $164 for you to go debt free in 3 years. The amount of money you pay depends on the time period and some consolidation loans can offer lower repayment amounts. Talking to a credit counselling agency also helps.
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