There’s no question that our debt was hanging over our lives – to the tune of bouts of depression as the bills piled up, and we paid them off only to have pretty much nothing left at the end of the month. What really hurts about debt is that you’re paying off just the interest; the money you actually borrowed is still just sitting there untouched for the most part.
Then one day we decided to do something about it – unequivocally. A mutual friend told us about online lenders, and how there are so many options available for people with varying credit histories. Now our credit score is modest, which means, generally, that big banks won’t consider us for personal loans for debt consolidation. However, we found consolidate.loan to be a great option – especially after we evaluated our debts and made a plan of action to finally settle them.
Make a Spreadsheet with All Debt
Did you know that in America alone, we collectively hold a trillion dollars worth of debt?! The first step to clearing ours required obtaining a free credit report so we could see where we stood. By getting this free report from all three of the reporting bureaus, we were able to find some incorrect data that, once fixed, made it more likely we’d be able to get a better interest rate on a consolidation – or other, in fact – loan.
Credit card debt is the most important one to take care of, since student loans and mortgages already have good interest rates – otherwise, nobody would be able to make the monthly payments on them! Plus; they tend to be decades’ long loan terms.
Determining Your Budget
In this all-too-crucial step, we set aside all the things we must pay for into one column, and all the extras in a second column. After coming up with a final tally, we decide how much we can afford to pay each month. If it’s too low, we make some decisions about the things we don’t need or particularly want. It’s all about subtracting enough so that we have a surplus of cash to throw towards paying our debt down.
This is the toughest part, of course. In our case, we tanked our Netflix subscription and switched to a less expensive internet carrier. Once you’re committed to living within your means, however, the sense of freedom you get from not worrying about credit card debt from month-to-month is worth every penny saved.
Initiate Your Plan and Talk to Lenders
After we tallied everything and saw where we stood, we started off by paying down the card with the greatest interest rate. We had enough of a surplus to use on the other debts, too; but most of it went to dialing down the primary culprit. This should go without saying – stop using your credit cards at this time unless absolutely necessary.
Next, we called Capital One (one of our creditors) and tried to get a better rate since it was a relatively high interest rate, and my credit had improved since I first got the card. They approved a reduction! You should try the same with your various lenders; especially if you don’t have any late payments.
Another option – we didn’t try this, but have heard that it’s viable – is to open a new credit line with a company that offers a 0% introductory rate for a couple of years. That way, you can move one of your high interest bills to this, such that all payments you make towards it within the next couple of years goes towards the principal.
The last part – and we’re still going through it, as it’s a lifestyle – is discipline. Every deviation you make from your plan will cost you money you could’ve used towards becoming debt-free. There will surely be bumps on the road, of course; just make sure to get back on track and continue mostly smooth-sailing.
