Find out how you can use your home’s equity to get rid of all your bad debt in this edition of Coastal Equities Finance Tips 101.
Tags: Coastal Equities Finance
The average American carries over $20k in bad debt. This can be from credit cards or merchant and store accounts. Basically, unsecured debt is bad debt because there’s nothing to back it up with. If you default on the payments, the debt becomes toxic, rarely ever paid off or fully recouped.
Unsecured debt carries a very high interest rate because of the high risk rate to the lender. Therefore, it usually follows you around for quite some time. If you own your own home and have plenty of equity, there’s a simple and straightforward solution that we’ll explain how to use in this edition of Coastal Equities Finance.
Assess Your Debt
Use a spreadsheet and carefully list out each credit account and the amount owed. Next, tag the interest rate and the minimum monthly payment. Factor what that payment is combined for all of your debts each month. Chances are it’s a sizeable monthly encumbrance. Now move on to step two.
Access Your Equity
Take out a home equity loan that’s locked in at a low interest rate to pay off all your bad debt with. Get rid of all that debt in one foul swoop with a lower interest and longer term, secured loan. Not only will your credit score skyrocket, but you will save thousands per year in interest and fees, too.
That aside, you will have also consolidated your payments into one easier monthly payment as opposed to many of them. When you compare the interest rate on a HELCO (equity) loan to a credit card, there is NO comparison. It’s just smart debt reduction tactics that can help you enjoy a debt-free existence.