For many people, using credit is a necessity. According to the Pew Charitable Trust, 8 in 10 Americans have debt, with mortgages being the most common liability. Just because you have debt, doesn’t mean you have to be consumed by it.
Here are three tips to consolidate your debt:
- For credit cards, look at the number of cards you have and the balance and interest rates on each. Start by paying off the card with the lowest balance, then move on to the next card. Once your credit card balances are manageable, make sure you’re paying them off in full each month.
- For student loan debt, apply the same approach. Pay off the loan with the lowest balance, then start tackling the next one. By paying off low balances first, you’ll see progress early on rather than feeling discouraged by trying to start with the largest balances.
- Consolidate your debt with tools such as a home equity loan. This allows you to consolidate several loan payments into one monthly payment. It will also allow you to chip away at the principle balance, and may even lower your monthly payments. Another benefit of your home equity loan is that your interest may be tax deductible. Consult your tax advisor to see if you can take advantage of this.