Consolidating and reprting
“The danger is if you eat up a significant part of your home equity,” says Gerri Detweiler, education director of business credit website
“Make sure you have plenty of cushion in there so if something happens and you had to sell your home, or you had to move ...
and you certainly shouldn’t send money with a wire transfer or prepaid card,” Detweiler cautions. Although it may be tempting, avoid using your newly cleared accounts to shop or manage household expenses.
You don’t want to create new debt that you’ll have to pay on top of your debt consolidation loan.
Interest paid on a home equity loan is usually tax deductible, while credit card interest is not.
However, home equity loans for debt consolidation can be risky, as your home may be foreclosed on if you can’t pay your loan.
Let's consider some arguments in favor of student loan consolidation and some arguments against student loan consolidation.
Consolidating basically means taking out a brand new gigantic loan to pay off all of your smaller loans.Compare your debt payment obligations and your spending to create a budget and determine how much you can realistically pay on your debt each month.Once you know how much you can realistically allocate to paying down your debt each month, you can use the amount to determine terms for your loan.Credit cards with zero percent APR on balance transfer offers allow you to transfer existing credit card balances to that new card. It’s essential to have a plan for how you can make the new payments, especially if you’ve previously struggled to keep up with minimum payments on your balances.For the length of the introductory period, you can make payments to reduce your balance without accruing interest. To avoid missed payments, penalties or default, you’ll need to create a budget that allows you to make payments on your debt consolidation loan.