Home Equity Loan - How do you feel about Debt Consolidation?

How do you feel about Debt Consolidation?

My husband and I are about $14,000 into debt. We just bought a home last year and you know how it goes from then on. Between the two of us, it's not too high of a number but with HIGH HIGH interest rates, it feels like it will never go away. We are looking into a personal loan (home equity loan not an option at this time). We want to payoff all our debts and use the rest for finishing our basement. I do the bills, and can't stand the anxiety associated with making sure everything is where it should be on time. From personal experiences, has anyone benfitted or had a loss from taking out a personal loan and re paying it back over time?

Public Comments

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Is it credit card debt? Taking out a loan will be a good idea ONLY if you don't plan on using your credit cards anymore. Cut them up - then a personal loan will almost always have a lower interest rate than your credit cards will, and you'll have a definite time when it will be paid off. Earlier if you pay a little extra every month. Good luck!
you can always benefit from a personal loan, but the key is to always pay more than the minimum amout on the bill, and it does build your credit which is never a bad thing.
Debt consolidation is only slightly better than bankrupcy. If you can avoid it then do. Everyone is in the same boat with bills due to the economy. Just try to hold on, if you can't then you'll have to do it if it's all credit issues.
The trick is to ensure that the loan you take out has a lower interest rate than your current debt. If you need to pay off credit cards, then go for the personal loan. Credit Unions and banks can probably get you something more favorable that a credit card. Once you have consolidated, make larger payments than the minimum due. Schedule and budget - these are the secrets to getting out of debt. You can probably be free of this within 1-2 years (or less!) if you stick to your payment plan and cut up all cards. You'll be really relieved once you are on track! Also, any bonuses or additional money which comes into the house should go directly to the debt!!!
Firstly, why do you want a debt consolidation loan? Is it because you are struggling with your finances? And is that because you are spending more than you earn? Please don’t just automatically deny this and move on. Look clearly - I know living is expensive, and you deserve some treats in life, but, and this is a big but: Debt consolidation will only help for a few months, soon you will be right back where you are right now, and sooner or later you will either have to adjust to spending less or earning more. In a survey done by the Motley Fool they found that about 80% of people who took out a debt consolidation loan then went on the get into more debt, and started down the path of spiralling debt and real problems. This is the main reason to discourage these loans, they are a sticking plaster on a broken limb. But if you still want a Debt consolidation loan then here are some tips to get the best out of it. The people who are most likely to have the most success with their loan are those who have ruthlessly analysed their spending and have a plan of action that they follow after they get their loan. Pay off your debts, cut up your credit cards and save up some money every month for unexpected events. Absolutely don’t take on a little extra debt for a holiday or some other indulgence. A cheap holiday can be very expensive if added to a loan! If after all this you still want a debt consolidation loan - then look at this review site for the best ones available:
Debt consolidation only makes sense from a big-picture POV (Will I be better off financially next year) if you can lower your total cost of borrowing significantly enough over the life of your borrowing experience. The bottom line is that only two kinds of borrowing have the potential to increase your net worth over time: (1) modest mortgage for a primary home and (2) business loan to expand a profitable business. Everything else ultimately lowers your net worth as you pay more to buy stuff today with tomorrow's income. Debt consolidation, as most people do it, makes matters worse: interest expense is increased by spreading payments over longer and longer time periods (and refinancing and refinancing...) and by paying companies money in upfront fees to open a new loan and consolidate.
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