Credit Crunch: Debt Consolidation Options

Pros and Cons of Debt Consolidation Options

You're here because you want to pay off your debt. You're tired of collection calls, tired of keeping up with different credit cards with different balances and different interest rates, and you're tired of seeing your hard-earned money going to perhaps a minor purchase that takes literally forever to pay off making minimum payments. But there isn't any quick way to get out of debt, there isn't any easy debt solution that fits everyone. Anyone selling something that's one-size-fits-all, easy, or quick is most likely trying to feed you a scam. Everyone has different circumstances, resources, problems, and causes of their debt. These variables factor in to what may be the best option for you.

This will be the quick guide to what your best options may be. We'll start by what is the safest and most recommended method and end with the worst-case scenario. These are listed from safest to most risky for most people seeking debt solutions. Your individual case may be different or stange, so weigh each possible option carefully. Remember, these are rough guides for those just starting out on their journey to pay off their creditors. This is not meant to be an end-all dictation on what you must or mustn't do. Your own situation may differ from what is "typical". (But probably not, so this should help point you in the right direction. Exceptions wouldn't be shocking. Surprising, but not shocking.)

Debt Consolidation Plan A: Spend less money and use money you save, by spending less, to pay your debts.

This should be the first thing you do before trying any other plan. If some smart money management solves your problems, you probably don't have that many problems. Basic money management is usually the first step, not the last. If you can eliminate all of your debts solely by spending less money and in less time than you would by another option, then congratulations. This means that the amount of your debt in relation to your income is not all that high. You can merely spend less money on things you don't need ("don't need" being the important qualifier) and finish paying off your lenders. If you actually have the means to do this, and you honestly hadn't thought of it before now, get off the internet.

If Debt Consolidation Plan A sounds like it just won't work for you, perhaps because you have too many loans already - loans at interest rates that are so high that it's almost impossible to make any progress paying down the principal - try a consolidation loan.