Some possible sources of debt consolidation help

More and more Americans are failing to save any money, and a new study shows that, as a nation, we saved nothing in 2005. That’s pretty shocking; it’s the first time since 1933 that the nation collectively failed to save anything. We are all in debt up to our eyeballs and it looks like a lot of people are going to have trouble paying their bills.

Once step towards getting out of debt is to employ the concept of debt consolidation, where a number of bills get grouped together into one lump sum. Instead of paying high interest rates and minimum payments to a number of creditors, you can reduce the number of payments you have to make and you can more readily address the principal of the debt rather than paying interest.

Here are a few sources of help:

Transfer your credit card debt to a card with lower interest. Often, you will see credit card companies offering deals if you transfer your balance to a new card. Sometimes these deals even include a grace period at 0% interest. Be careful; that rate is only temporary and doesn’t apply to new purchases.

Home equity loans. Borrowing against your home is a great idea if you have discipline. The loans are available at much lower interest rates and the interest may be tax deductible. Watch out, though - the loan is guaranteed by your house and if you fail to pay, you may lose it!

401(K) and other retirement accounts. You can usually borrow from your 401(K) plan through your employer. You will, in effect, be borrowing from yourself. The rate to pay it back is usually good, but be aware that while you are borrowing, you aren’t earning anything towards your retirement with that money. You will never be able to recoup the lost investment income. Still, if you are desperate or have a lot of debt at high interest, this may be an option for you.

Family? Friends? It’s not always a good idea to borrow from family and friends, as many good relationships have been ruined by lent money, but if they are willing and you can pay them back, they will probably be more forgiving than a credit card company or bank. Use this option at the risk of losing your friends and family.

Renegotiate with your lender, be it a mortgage company or a credit card company. They are often understanding if you haven’t been able to pay and they might be willing to work with you a bit. They would rather work with you than see you fail to pay altogether, so it may be worth a phone call.

See a nonprofit credit counseling agency. They can help you prioritize your debts and develop a payment plan.

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