Choose A Way to Ditch Debt: consolidations, refinancing, home equity, a personal loan and other careful fixes.

Everyday, it adds up. The toll grows higher and higher. If only, it could magically disappear. From the phone to the mail, the friendly communications are not from one’s friends or family members. They are the dreaded collection notices.

Nonetheless, without financial resources your debt will not go away quietly. Paying the minimum balance is not going to put a dent in your debt ratio. Managing your money, credit and personal finances requires an intelligent plan. Before you put your plan of action together, familiarize yourself with your available options.

Your best debt-consolidation Options

Home Equity.
As a homeowner, you are entitled to a home equity loan. There are several benefits associated with this debt solution option.

• Moderately low interest rate
• The interest is tax-deductible.

Home Refinancing.
If you own a home, you can refinance your property for greater than the value you owe. The extra cash can be used to pay off your debt. Calculate the difference between your current debt versus stretching your payments over 15 or 30 years. Assess which solution is best for your lifestyle.
The advantage is:

• A low fixed interest rate

Auto Refinancing.
An uncommon choice, it is a secured loan that you can borrow against. The downside of exercising this option is that you may run out of your car before you pay off the debt. Additionally, buying a new car may pose a challenge.

Personal loan.
If your credit is only slightly tainted, you may qualify for an unsecured loan. Atypically, credit unions provide lower rates than banks and other financial institutions. A rate of 11% or more is to be expected; however, it is less than the 20%+ that your credit card company charges.

Negotiate your terms.
Many corporations authorize their customer service people to reduce consumer’s interest rates or fees. Consider negotiating your terms by requesting a lowered interest rate.

Other Careful Options.
Debt consolidation may be a good choice as long as it does not require you to incur more debt. Choose a credit-counseling agency. Make sure that you ask the following questions before using the service:

1. What are their service fees? (Stay away from any company that cannot provide a general range of fees.)
2. What is the projected time span for repaying your debt?
3. Do they offer financial counseling and budgeting?
4. Are there any policies to assure the protection of your funds?
5. Do they retain any of your payments for their company/service?

Seven Steps to Debt Recovery

1. Organize records.
2. Ask for a credit report.
3. Calculate your debt-to-income ratio.
4. Clarify goals.
5. Prepare a spending plan.
6. Put your plan into action.
7. Build your savings account.