Getting Out of Debt

While getting into debt can happen in a flash, getting out of debt can be a long and complicated process. It is important for all consumers to understand that getting out of debt will not happen overnight. It is also important to remember that getting out of debt takes lots of hard work and no small amount of discipline.

There are a number of options consumers have when it comes to getting out of debt. The most common methods are credit counseling, debt consolidation loans, home refinancing and cash out options.

Credit counseling
Credit counseling is one of the most common solutions for those struggling under mounting burdens of debt. It is important to shop around for the best, most honest and most experienced credit counseling firm, as these firms vary quite widely in what they have to offer.

There are some excellent credit counseling companies out there, but there are also many that charge exorbitant fees for things consumers can do themselves, such as challenging erroneous entries on a credit report. A better choice may be one of the non-profit or government sponsored credit counseling services. These non-profit firms often charge little or no money to help consumers get out of debt.

Debt consolidation loans
The goal of the debt consolidation loan is to take all those high interest credit card bills and replace them with a low interest debt consolidation loan. It is important to shop around carefully for such a loan, as the interest rates and loan terms can vary quite widely.

Home refinancing deals
In today’s record low interest rate environment, the interest in home refinancing offers has never been greater. Refinancing a high interest mortgage at a lower rate can result in payments that are hundreds of dollars a month lower, thus freeing that money for use in paying down debt.

Cash out options
Many home refinancing offers are touting the benefits of the cash out option. In such an arrangement, the homeowner pulls some equity out of the mortgage and uses it to pay off high interest credit card debt. This can be a good option on some cases, but it is important for each homeowner to carefully weigh the benefits and drawbacks of such a plan.

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