Debt consolidation isn’t easy, but here are some places to start

By:Talbert

The .average American household now carries nearly $10,000 in credit card debt in addition to home loans and auto loans.
In short, we’re overburdened as a society. With credit card minimum payments having recently doubled and interest rates rising, keeping a large amount of credit card debt is becoming more and more unwise. Here are some tips for how you can begin to get your finances in some sort of order. You may not be able to eliminate your debt completely, but you may be able to consolidate your debt somewhat.

•Move your money to other credit cards. This won’t work if you are already maxed out on all of your cards, but if you have room elsewhere, you might want to move some of your debt to a card with a lower interest rate. Alternatively, if it’s possible, you might want to take advantage of some low-interest “teaser” rates offered by credit card companies for balance transfers to new accounts. Be careful, though. These rates don’t last long and the fine print usually states that the rates can increase substantially if you fail to make timely payments. Additionally, new charges on the account may have higher rates that apply.

•Take out a home equity loan. Interest rates are rising on all types of mortgages, but home equity loans are still cheaper than credit card loans. Plus, the interest is tax deductible, at least for now. Be aware that if you do this, you are offering your home as collateral. If you fail to pay, you can lose your house! Don’t go this route unless you are sure you can pay your bills on time.

•Loans from 401(K) plans. Many employers allow their employees to borrow against their own 401(K) plans. You are, in effect, borrowing from yourself at a favorable interest rate. This isn’t really all that good an idea, though. While you are borrowing at a good rate, the money you have borrowed is no longer growing. You can pay the money back in time, but you will never recoup the increase in your retirement savings that you missed while your loan was out. This option is usually a poor choice.

•Renegotiate with your lender. Lenders generally aren’t interested in renegotiating with customers that are paying their bills on time, but if you are in arrears, you may be able to improve the terms of your loan somewhat. Lenders would rather accept less than full payment than get nothing at all. Be aware, however, that if they lower the amount you owe, that money waived may be treated by the Internal Revenue Service as taxable income.

These are just a few options available to those with problem debt. Others are available, as well. The main point is that there are better choices than simply filing for bankruptcy, and you would be wise to look into them.

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Article keywords: debt, debt consolidation, finance, family, home, mortgage, real estate, marketing, credit card debt, parenting, home, living

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Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com

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