Diverting Debt – How to Divert Debt into One Manageable Place.

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(ThyBlackMan.comDebt is one of those things that snowballs quickly; we’re not quite aware of how far in the hole we are until a major event brings it all crashing down upon us. When a crisis isn’t part of the picture, out-of-control debt doesn’t catch our attention until we are too overwhelmed by the large stack of bills and the incessant phone calls from debt collectors. At some point, though, we have to face the debt beast.

For many Australians, regaining control over out-of-control debts isn’t impossible, just because of the sheer number of tools available to help consumers. In Australia, debt consolidation loans with Latitude, zero-interest or low-interest credit card balance transfers, equity loans, and just plain ol’ paying the debt off through counselling, are just a few of the ways consumers can tackle debt. However, of the many ways to manage debt, consolidating is probably the best way to lower your monthly payment while also reducing monthly expenses.

Let’s take a look at just some ways that you can divert your debt and get back in control of your finances.

Debt Consolidation Loans

Debt consolidation loans are probably the worst-case scenario solution when dealing with out-of-control debt. For borrowers, debt consolidation allows you to combine all of your debt into one payment, which is great because over time, a consumer doesn’t have to pay as much in interest as they would have if they’d tried to pay each debt off individually. The only caveat to debt consolidation loans is that they come both origination and early termination fees, and, because the lender has to make inquiries to your credit, your credit score will be lowered as well.

Credit Cards

Another way to reduce debt by consolidating into one payment is through low-interest or zero-interest balance transfers that will allow you to combine a small amount into one card. The great thing about these credit card accounts is that they give consumers the chance to pay off their debts without having to also pay an exorbitant amount of interest. Moreover, with credit cards, the interest can make a payment balloon if the principal is excessively high.

Alternatively, for borrowers to really get the advantage from these cards, they have to be diligent enough to pay off the debt quickly. The reason for that is because the introductory interest rates are limited to a small time-frame, and after this time, the rates return to normal. For borrowers with large balances, this might not be the best option, just because there’s not enough time to pay off the debt before the new rate kicks in.

Equity Loans

For those who own property, equity is another way to combine a number of debts under one payment. Unlike other options, equity loans allow you to essentially borrow from yourself if the value of your property has increased. The only problem is that the process takes a while longer than other options because the property’s value has to be assessed in order to determine how much can be borrowed.

The risk of taking out these loans is that the interest rate might change for the worse. Furthermore, if property values fall, you might find yourself in a situation where you owe more on the property than it is worth. Those considering this type of loan should carefully review the numerous equity programs, as they can really change the amount of your monthly payment.

Making Debt Manageable

One of the best ways to rein in the debt beast is to reduce your overall monthly expenses through consolidation. Consolidation places your bills under one interest rate, which significantly reduces the amount of interest that is paid out when trying to pay off more than one debt. Ultimately, through debt consolidation, consumers can accomplish the most important thing when faced with overwhelming debt – gaining control of their expenses.

Staff Writer; Ron Jacobs