Consolidating debts pros cons

6854933580_2c8b688306_z

The following is more in-depth information on the different types of debt you can incur as well as options to consolidate this debt and come up with a debt management plan to achieve lower and more manageable payments.If you’ve built up some equity and interest rates seem favorable, it may make sense to refinance your home and use the additional cash you can borrow to pay off more expensive debts.Once you’ve chosen a debt consolidation method, it’s a good idea to keep the total cost as low as possible.

If you were to withdraw retirement funds early instead, from your 401K, for example, you’d have to pay taxes and a 10% penalty.The interest rates on these loans tend to be low — or even interest-free.For example, you can use money from your IRA interest-free for 60 days.Not paying creditors will also show up as a negative transaction on your credit report that makes it harder to borrow more money.And then there’s the risk of increasing your debt if you fail to make your payments under a debt settlement program.Or you might be better off taking out a home equity line of credit (HELOC) or a fixed-rate home equity loan.

You must have an account to comment. Please register or login here!