Many people don’t take the money they make seriously. They are foolish and often spend it on frivolous items that they do not need. While you work hard for your money, being irresponsible with your money is the best way to fall hard and fast into financial ruin. If you have acquired a large amount of debt and you are ready to get your finances in order there are several ways to do it.
Refinance your mortgage or apply for a HELOC
If you have an existing mortgage, have equity, and have made your payments on time, you can either refinance your mortgage or apply for a Home Equity Line of Credit. Shop around for the lowest rates before you apply and make sure that you pre-qualify. Most lenders require a good credit score, a good payment history and an acceptable debt-to-income ratio. Even if the last one is a little off, if your credit score and your payment history are good you should be able to get an approval, especially if that’s the sole reason for the loan.
Personal loan or a short-term loan
If you don’t own a home and wish to acquire a personal loan, it’ll be a little harder to get an approval, but it’s still achievable. You must have a good credit score, a steady, reliable income and a good payment history. Sometimes even though you have all of those things, lenders still deny the loan due to not enough credit, too much outstanding credit or because the credit you do have is less than a year old. If you get the denial there are still other loans, like a short-term loan. The requirements for a line of credit loan are a little easier to acquire. You’ll still need to have the basics like a steady job and a checking account. The repayment terms can range from a few months up to 2-years, allowing you to make an affordable low monthly payment.
Borrowing from a retirement plan or family member
If you contribute to a 401K and have enough money vested, you can take out a loan for a portion of the money. Generally, when you have one through your job, the repayment would come directly out of your weekly or bi-weekly check. The nice thing about borrowing this money is that you are borrowing from yourself and paying you back with interest. Be careful though, since this is a retirement fund if for any reason you don’t pay back the full amount you borrow, you can end up owing interest and penalty fees. Another source could be a family or friend. If someone you know is willing to lend you money you would more than likely repay it interest-free. Just remember that it is a loan, and just as you would have a monthly obligation from any other lender you need to treat this the same way.
Getting your finances in order
There are times when borrowing is essential, like in the case of a mortgage and even a car loan, though you should try to put as much down as possible. Then there are other times where borrowing is a direct result of poor money management. You live your life without a plan in place and spend without saving for a rainy day. Make this loan the last one you take because you have too much debt. Instead, work towards paying down your debt and learn to live on cash, not your credit cards. Using credit cards for the benefits and paying them off each month is good. However, running up debt on frivolous items you can’t otherwise afford and then carrying the debt for many months is foolish and costly.
Establish a savings account
In addition to setting up a budget, you need to open a savings account designed specifically for emergencies like a home or auto repair. You can start slow and add just a few dollars a week. Before you know it you’ll have enough money to cover most any unexpected expense that comes your way. You can also establish a vacation account and use the same method, throw a few dollars into it and you’ll never have to say I can’t afford to get away again.