Many credit card holders suddenly find themselves in full-blown debt, unsure of how they got there, barely able to make minimum payments, and just feeling like a hamster on a treadmill. Should you be a homeowner and should you be serious about relieving yourself from your onerous credit card debt, you will be pleased to understand that it can be accomplished more easily than you realize.
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Debt consolidation is a process whereby you pay off all your creditors with one fresh loan. That fresh loan is secured by collateral in the form of your home. Once you get that settled, it will be up to you to quit using your credit cards as a source of income and start using them only when necessary and in a mature manner. Following are the four steps our should consider
Speak with a Lending Broker
Approach a lender and see about consolidating your high interest credit card debt with a home equity consolidation loan. Once the funds are discharged from your home equity loan, your creditors and their representatives will no longer harass you. Your interest rates will be lower. After the loan is discharged to the satisfaction of your creditors, you will have one payment, to one address, with one interest rate, due on one day, and life is suddenly simpler. The payment could very well be lower than the sum of all your other payments together. Any extra cash should be applied to the loan or put into savings, not spent.
Stash the Credit Cards
You already know that you are liable to get in trouble with your credit cards. Try saving just one for emergencies. Do not carry that one. Give it to a relative or trusted friend. Slice all the others up. Do not put yourself at risk again. A debt consolidation loan is a big step and you do not want to do a new one year after year. Please do yourself a big favor and avidly apply this lesson. The road to financial hell is paved with credit card debt.
Change Your Lifestyle
You do not need to eat out three or four times a week. All that restaurant and junk food is bad for you anyway. Do yourself a favor and learn to cook. Your health and your friends will reward you. You do not need to buy something every time you walk through a shopping center. The nickel and dime stuff is usually what tears up credit card users. That daily cappuccino blithely shows up on a credit card bill as $100. Only you cannot see it because it is not all added up for you. Tricky? Yes! Foolish? Yes!
New Habits in Order
Relying on cards is bad. It is too much like spending someone else money or like having another source of income. It is neither and the monthly bills prove that. Every dollar you spend, only 85% of it is really yours when using a credit card. And then, with compounding, that spent dollar becomes less and less yours. You need to break the spendthrift habit and give yourself and your credit score some relief.