For small amounts of debt, you may be able to consolidate on your own. If you have money that you can get to, you can use it to pay off your debts. Here are some sources of self funded debt consolidation.
Home Equity Loan
Sometimes you can take out a loan against the equity you already have in your house. This is usually some of the least expensive ways to borrow money because your house is collateral.
Retirement Funds for Debt Consolidation
Certain types of retirement funds will allow you to borrow against them or take withdrawals when you have financial problems. Once again this can be some of the least expensive money. In some cases you will be charged interest, but the interest goes to your account, so you are basically paying yourself interest on your debt consolidation loan.
Using Relatives for Debt Consolidation
This can be a very bad idea because it can ruin your relationship with your close relatives. However taking out a loan from a relative at a lower interest rate than your current loans and using the money to pay off the current loans, can be a financially wise way to consolidate your debt. Just make sure you understand how it will impact your relationship and handle the loan professionally as you would with a bank.
Selling Assets for Debt Consolidation
Selling off assets can be a great way to get out of debt. Technically it isn’t debt consolidation because you are eliminating debt instead of just consolidating it. Selling off an extra vehicle, furniture, a boat, electronics, or even your house can be a financially wise decision. If you are able to sell something that isn’t an asset (something that will go down in value) this is a great idea. Your non-assets will be worth less in the future than they are right now. By selling them you can take the current value and wipe out your debt for that amount. This effectively turns them into assets because they save you money in the future, so it is as if they become worth more.
Comments on this entry are closed.