Budgeting vs Debt ConsolidationBy Caitlin in Debt
So you’ve gotten yourself into a tough spot. You have a lot of debt and it’s time you took care of it. What can you do about it?
Our advice is to consolidate your debt for yesterday’s mistakes, and start budgeting for tomorrow.
Many options are available to you if you are looking to reduce your debt burden. Let’s go over a few of them:
Debt Consolidation Loans
One of the best ways to reduce your debt burden is to consolidate your debt with a low interest loan. This process basically allows you to swap high interest debt with low interest debt. High interest debt can come from expensive credit card bills, cell phone bills, installment loans for appliances or furniture and other debt. The goal is to obtain a low interest loan to pay off your high interest debt, thereby reducing your overall debt burden, total interest, and monthly payments.
The security for such a loan could come from your home equity. A debt consolidation loan can also be granted as a long-term loan which would effectively lower your total monthly repayment amount as well as give your budget some breathing space.
A debt consolidation loan can come in the form of a first mortgage, a second mortgage, a mortgage refinance or a home equity line. For more information on these services, check our services page.
Debt Consolidation Program
Another way to ease your debt woes is to join a debt consolidation program. You would be provided with a debt counselor and a solution specific to your situation.
If even meeting your minimum monthly debt payments is impossibility, you may want to look into debt settlement. Debt settlement is a program that allows one to negotiate his or her debt down with the lender or collections agency. Lenders are willing to accept debt settlements because they are better off getting a portion of their loan back than nothing at all.
Consumer Proposal or Bankruptcy
As a method of last resort, bankruptcy is always an option. Bankruptcy is a method by which you can relieve yourself of all pre-existing debt. It gives you a fresh start – but at a cost – a mark is left on your credit file for 5-7 years, diminishing your chances of qualification for future loan applications.
If you really are drowning in debt right now, the best thing you can do is take responsibility for your past decisions and move on. Start budgeting for tomorrow, today.