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Personal loans and debt consolidation

[Apr 29, 2011.]

 

Every day millions of Americans juggle multiple credit card payments and other debt. Many of these people have given up hope of ever getting out of debt. But instead of throwing in the towel, look for tools that can help get creditors off your back. Used the right way, a personal loan could speed up your debt reduction strategy.


Personal loans and debt consolidation


A personal loan could allow you to consolidate several high-interest debts into one payment. But if you choose this strategy it is important to have a solid plan in place for not taking on new debt. Once you consolidate credit cards get rid of them or you may end up in worse shape than before getting a loan. Only you know whether you should cut them up or just lock them up, so make the right decision for you. While your credit score will take a ding if you close the accounts, doing so may be the right choice if you really want to get free from the temptation of using open credit lines.


Monthly loan payments


Obviously, one of the goals with getting a debt consolidation loan is to lower interest and monthly payments. But if possible, pay more than the minimum monthly payment to erase debt faster. The more money you can put toward loan payments the faster it will get paid off.


Use a debt counselor


Don't feel obligated to use a debt consolidation company that charges fees to help you pay off debt. Some debt consolidation firms simply take your money and never help you make progress in knocking out debt. However, you may actually benefit from working with a knowledgeable debt counselor. Not only can you get help with your budget and debt reduction plan, but some counselors offer classes and workshops to help improve overall money management skills.


Weigh all your options carefully before deciding to get a personal loan to consolidate debt. Paying off bills takes organization, hard work and a steady income. Do as much as you can to reduce expenses and eliminate those that are unnecessary. But if you stick with a debt reduction plan over time you will see positive results. Spend some time shopping around to compare personal loans to see if debt consolidation can actually help you. While getting a loan can be the right move for some people, that doesn't mean it is the right choice for you.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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