Consolidate Debt Loans After the Holiday [Debt Consolidation]
November 12, 2007, 14:27:10

The holiday season means many things to many people. For too many of us, it means dealing with a pile of debt. In the spirit of giving, it’s easy to get swept up in the moment and overspend our holiday budgets.

But money spent on others is still money spent. If the holidays have left you with several credit card bills and other financial headaches, you should consider how to consolidate debt loans such as credit cards and other debts into a much more manageable payment.

Debt consolidation offers a simple solution: a lumping together of your bills into a single monthly payment. If you have many outgoing bills each month, each one incurring interest charges, debt consolidation can really help reduce your costs. And let’s face it – most of us could use a little help after the holidays.

If you want to consolidate your holiday debt, there are a couple of ways to go about it. Debt Consolidation services are one option. If your debt is moderate, you can take out a low-interest loan from your bank, credit union, or other lender to pay off the holiday bills. Then you simply repay the loan in a single monthly payment. This reduces the amount you spend on interest, especially if you’re able to pay off the loan quickly.

If you’re confident you can pay off your debt in a year or less, 0% interest credit cards might be a good choice. You can take the debt you owe on high-interest cards and transfer it to a 0% interest card. Just be aware that the 0% interest lasts for a limited time only – usually 6 to 12 months. Some cards might also charge a balance transfer fee. Make sure to read and understand all the terms and conditions for any credit card you use.

If your debt problem is severe, credit counseling centers and debt management plans (DMPs) are another option. Credit counselors can get you enrolled in a plan where you make a single monthly payment to the organization, which pays your bills on your behalf. Be careful when selecting a debt management program; they can have a negative impact on your credit score, and some require you to adhere to certain rules, such as not applying for or using credit for the program’s duration.

Finally, debt can be consolidated by borrowing against your home equity, retirement, or life insurance policies. Most professionals advise against this, as you risk losing your home or benefits if you are unable to repay the loan. Loans of this type should be considered last resorts before bankruptcy. If your debt has reached the level where a home equity loan sounds tempting, you should also work to change the spending habits that got you into debt in the first place.

Could you use professional help after the holiday season? The pros generally consider a debt load to be manageable if it’s less than 40% of your income. If you’re paying out more than that each month, it could be in your best interest to speak with a debt counselor or a lender that offers low-interest debt consolidation loans. Think of debt relief as a post-holiday gift to yourself.

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