Four Debt Relief Options For Debt Free Lifestyle

Written by admin on April 13th, 2011

Debt can be snowballed very quickly until it reaches the amount beyond your financial affordability and causes a financial problem, especially when you have many payments to make every month. That’s why, debt consolidation is a popular option for people to combine multiple debts into one in order to work their way out of debt. However, debt consolidation is not a solution for all financial problems. You may need a better option to achieve a debt free lifestyle. Following are a few debt relief options, which you may use one or the combination of them to get rid of debt.

Option 1: Get help from a consumer credit counselling service

Consumer credit counselling services help debtors to explore the debt relief options while educating them on how to manage their finance to avoid future debt issues. Once the credit counsellor gets to understand your financial situation, he/she will propose debt solutions according to your financial affordability. Each solution may come with pros and cons, so you have to decide a solution that fits your financial situation with the help from the credit counsellor. By consulting a credit counselling service, you will have a better picture on how your debt is and the potential solutions to get rid of it.

Option 2: Balance transfer credit cards to the card with lower interest rate

Although transfer the balance from one card to another does not help you to get rid of debt, but it can be a way to consolidate multiple high interest rate credit cards’ balances to a credit card with lower interest rate, so that you pay less interest on monthly payment. But, beware that all balance transfer offers come with a low interest rate during introductory period. After the period, the interest may jump back to normal rate, or even higher. So, you have to be very careful and only perform the balance transfer if you are able to pay the balance off while you are in the low introductory interest rate. Watch out the balance transfer fees that may cause you pay more.

Option 3: Consider a home equity loan

If you have a home with sufficient equity, you may consider getting a home equity loan to pay off your debt. Since a home equity loan is a type of secured loan, you will be able to get a lower interest rate than an unsecured loan, save you thousands of dollars in term of interest. One negative impact to this option is you are putting your home at risk if you default the loan due to any reason. So, you have to make sure you make the repayment on time until the loan is paid off.

Option 4: Borrow from 401(k) or other retirement plan

You may borrow against your retirement plan/401(k) and use the money to pay off your debt. But, there will be tax penalties for accessing your retirement funds before you reach the retire age. If you don’t pay back the loan, the loan amount plus the interest will be deducted from the benefits that will be paid to your beneficiaries. So, make sure you read the fine print about the terms and conditions involved before you apply for it.


There are many debt relief options that you can use to get a debt free lifestyle. Debt consolidation may not be the best option for you. You should evaluate various options before you come to a decision to select a debt relief solution that best fit your financial situation.

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