Debt Consolidation - Different Ways to Consolidate Debt

Keeping up with bills can be frustrating if you have more than a few financial obligations. Debt consolidation can make your life much easier. By combining several accounts in to one you can save a lot of time and money. Here are some of the most popular ways to consolidate debt:

If you are a homeowner and have enough equity in your home, you can take out a home equity loan to consolidate debt. You can refinance your first mortgage, take out a second, or take out a home equity line of credit. Most of the time, this type of debt consolidation will significantly improve your cash-flow, because of lower interest rate and longer re-payment term.

If you don't own a home, another way to consolidate your debt is to take out a credit card with high credit limit and low introductory rate and transfer all of your balances to that card. After that you need to create a payment schedule to pay off the credit card. Figure out how much you need to pay in order to pay it off in two or three years, and then consider if you would be in a position to make your debt consolidation payments. If introductory rate expires before you are done paying, consider taking out a new credit card with a new introductory rate and transfer the balance again.

Another way to consolidate debt is to seek assistance from a debt consolidation or debt settlement agency. For a fee, these companies will negotiate down your debt and put you on a payment plan. Usually, you can be done with your debt consolidation within two to three years. One thing to know about debt settlement is that it will negatively affect your credit for some time.