Have you considered borrowing your way out of debt? It sounds silly, doesn’t it? You are borrowing money to pay off your debt, so are you actually getting anywhere. Many people justify doing this by explaining that they are moving the money they owe to a lower interest rate loan, so they are saving money.
Unfortunately many people do this using a home equity loan. And usually they are transferring unsecured debt (like credit cards) to a secured debt (your house), which means if you cannot pay for some reason you will lose your home.
Often times people will not change their spending habits once they have completed the transfer. People often charge their cards back up to the same amount within two years. If they hadn’t transferred the money, they might not have twice as much debt as they did before. If you do decide to go this route you will definitely need to cut up and close most of your credit card accounts. It is important to stop opening new ones as well.
Another thing to consider is the length of time it will take to pay off your loan. Often debt consolidation loans extend the period of time that you have to pay back the loan. While the interest rate may be lower, you may still end up paying more in interest because you will be paying on the loan for a longer period of time.
If you are serious about getting rid of your debt, then your best bet is to start a debt snowball. This will help you to pay off your loans quickly, because you are focusing your payments. It will also help you to change your spending habits, because you will need the extra money to really make the debt snowball work for you. If you are serious about eliminating your debt you can be debt free much quicker, then if you went with loan consolidation to pay off your debt.
Related Articles:
How to Set Up a Debt Reduction Plan
Five Reasons to Payoff Your Loans Early
Where to Start on My Debt Reduction Plan?