Struggling to repay your debt is not an unnatural scenario considering the ever-plunging condition of the economy. The lack of well-paying jobs, coupled with the high cost of living has made the situation worse. If you are going through a similar phase and are baffled about what would currently be the right path for you, then take a moment toread about lending tree. Or read through this article to arrive at a well-calculated decision regarding your debt consolidation.
· Life Insurance policy
When it comes to consolidating your loan in an emergency, borrowing a portion of your life insurance savings can be a wise recourse. In this method, you can borrow an amount that is equal to your loan value without being hindered by any restrictions, and get started with the consolidation process. You will not be asked to make payments to the insurance company until the amount that you are withdrawing for the loan is a little less than the cash value served by the policy. However, after having repaid the loan, if you fail to reimburse the amount deducted from your policy, you can be deprived of the death coverage and the amount that was assigned to that will be forfeited, leaving your family with no benefits after you are gone.
· Transfer the balance of your credit card
Before diving deep into this process, let us tell you that the credit card balance transfer will only be possible if the card you want to transfer to has a lower interest rate. If you already own a high limit credit card, divide your high-interest balances into a few small ones. Then employ the two or three lowest interest rate credit card balances to aid you during these moments of crises. Nonetheless, remember that this method of transferring your credit card balance for the debt consolidation will be effective only if the total amount that you pay along with the interest is less than the other procedures. At times you will receive offers from a credit card for 0% interest for about a year. There is a one time fee, but it is much less than the interest you would pay over a year. This is an excellent opportunity to pay off your high-interest credit card.
· Debt consolidation loan
Yes, you will be surprised to know that the bank and non-profit debt consolidation companies sometimes offer loans to help you pay the debt back. The core of this process lies in adding all your debts together, and consolidating them into one loan so that you can have one lower payment that is affordable. But, before you implement the process, ensure the hidden charges, rates of interest, and payment conditions that come with these loans. You must read through carefully, or you may have the company to hand you a huge bill at the last stage of debt consolidation. Research the company carefully. Also, rather than completely trusting the solitary companies, you can apply to the regular bank that you are a customer of, and use a low-interest loan.
· Borrowing from a retirement plan
Probably the most disheartening and ambiguous choice to turn to, when it comes to a method for your debt consolidation, is to borrow from your retirement plan. Apart from a few aftermaths of drawing from the 401(k) retirement plan, most of the other schemes allow you to deduct your money seamlessly. There are two conditions that should be checked. First, you will have to repay the amount borrowed within five years or will be stamped with income tax penalties. Secondly, if you resign from your current job, the amount of time allowed to repay the loan will be only 60 days, failing which, you will have to face the early withdrawal penalties.
You do have options, which is encouraging, but do your homework and find the one that is right for you.