|
metoo -> RE: How about consolidation loans? (4/15/2008 5:27:08 PM)
|
I recommend against it. Statiscally the number of people who get consolidation loans and then a year later have run up the credit cards again is incredibly high. Instead this is what I would suggest.
1. Although it may seem obvious, stop creating new debt. Don't use credit cards, pay-day loans, get a car loan. Nothing! NO NEW DEBT!
2. Make a list of all your debt. Include the balance, interest rate, monthly payment and how many payments are left.
3. Pay off the smallest debt first. If you have any extra money, apply it to the smallest balance. When this debt is paid, add the amount you were paying on this debt to the next smallest debt and keep doing this. If your minimum monthly payments go down, add that amount to the smallest bill. In other words, you will always be paying the same amount each month, even as debt is paid off.
Some people will say pay the highest interest rate debt first. After time, you may want to consider this to some extent. But first, eliminate a few debts. It will help you press on toward your goal of being debt-free.
After doing this for a year, if you have not added any new debt, you may want to consider a consolidation loan if it will save you a lot in interest. Keep paying the same amount that you have been paying so you get out of debt as soon as possible. When ever you get any extra money (gifts, overtime, tax refunds) ALWAYS apply it to the debt payments. Don't go "reward" yourself.
|
|
|
|