To get your finances in order, it's key to create a budget and track your progress. There's no universal approach for monitoring your budget, but if you're in debt, you'll want to take inventory of your finances often and take note of your spending habits at least once a month. The goal is to avoid overspending – and understand how much you spend each month to create a plan to pay off your debts. "This word 'budget' seems to be such a painful word to everyone, but there is actual power and freedom in having a budget in place and having the power to tell your money where to go," Omo says. "It's the basis of your plan to get out of debt."
Taking out a loan should be a relatively seamless process. There are a lot of lenders to choose from, so conducting research to see which financial institutions provide the best — and worst — user experience can save you a lot of headaches. Browse each bank’s website to review customer service contact options, read reviews and search social media to see what people are saying about your top choices.

You also may not want to close your old credit cards, as this can potentially ding your credit scores as well. By keeping your old credit cards open, you will not lower your credit utilization. Your credit utilization counts toward 30% of your credit score, and that’s why it’s important to keep that ratio low — under 30% and, optimally, less than 10% of your credit limits, overall and on individual cards.


After you’ve resolved the negative items on your credit report, work on getting positive information added. Just like late payments severely hurt your credit score, timely payments help your score. If you have some credit cards and loans being reported on time, good. Continue to keep those balances at a reasonable level and make your payments on time.
Check what your monthly payment on a debt consolidation loan would be. Are you at least paying that much towards your credit cards now? If the loan payment is more than you pay towards your debts (and it fits into your budget), it might be time to up the ante and just put more money to your credit cards. If the loan payment is less than you pay to your cards, you'll likely wind up paying way more interest over time, since your loan term will probably be long.
It's tempting, isn't it? Getting rid of all of your credit card bills, no more annoying multiple payment to multiple creditors, just one, automatic loan payment every month that comes out of your account automatically and you're back on the road to being debt free, right? Well sure—but it comes with a couple of pretty big caveats that might sour the milk for you. Let's explain, and then you can decide whether it's a good idea in your case.
In a competitive market, credit card companies are always trying to lure customers with their frequent flyer miles and cash back offers. Even if you have found a new-and-improved credit line, keep your oldest account active and in good standing. While new credit is important, credit history has a larger impact on your score. Use your old card for occasional purchases to keep things balanced. It could help boost your score with little effort.
In general, older consumers have higher credit scores than younger generations. Credit scoring models consider consumers with longer credit histories less risky than those with short credit histories. The Silent Generation and boomers enjoy higher credit scores due to long credit histories. However, these generations show better credit behavior, too. Their revolving credit utilization rates are lower than younger generations. They are less likely to have a severely delinquent credit item on their credit report.
Most employer-provided retirement plans permit participants to borrow from their own savings. Since it's your money, there's no credit check or qualifying hoops to jump through. You can generally borrow up to half of your vested retirement balance, up to $50,000. The interest rate may be one or two percentage points higher than the Prime Rate, which recently was around 4%. You usually have up to five years to pay back money used for consolidating credit card debt. Miss that deadline and you may owe income tax and potentially a 10% fee on the remaining balance.

Sometimes in life, you can take your sweet time, like when you’re taking a Sunday drive, getting to know someone before getting married, or putting together Ikea furniture. However, there are plenty of other instances where time is of the essence. Shopping at the mall on Christmas Eve? You’ll probably want to get in and get out. Have a big project at work and the boss is flying in tomorrow? It behooves you to have it done if you want that raise.
Next, your credit counselor will compile your data and ask you to commit to a debt management plan if they believe it’s the best option. If you choose to move forward, you will begin making a single monthly payment to the credit counseling agency who will disburse the funds on your behalf. Your credit counselor may also suggest alternatives to debt management plans if they believe a better option is available.
Your best bet is to call and ask to see if they can put you on a payment plan where you can afford to pay them (even if it’s just the bare minimum a month) or if they will possibly settle for less money. A tip: anything that has your name attached (banking account,utility bills, credit cards, anything you finance, student loans, medical bills, car loans, home loans, your apartment, etc) that you miss a few payments on or don’t pay at all can be reported to the credit agencies and sold to collections companies.
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