With the holidays concluded, the new year began, and spring right around the corner, now is a great time to start thinking about consolidating your debt. While there are many benefits to debt consolidation, it can be hard to know where to start. That’s why we asked Marcus Kennedy, Kitsap Credit Union Branch Manager, for his advice.
Marcus joined our team in 2021 as Branch Manager of our 176th & Meridian location in Puyallup. His passion for helping people and his knowledge and experience, make him an excellent resource for money management advice! Check out his answers below.
Q: Why should you consolidate debt?
A: Consolidating multiple debts into a single loan can help reduce the number of payments and interest rates you must keep track of. A single payment monthly, instead of multiple payments, reduces the chance of forgetting or missing a payment. You can potentially lower interest rates with a consolidation loan, paying off debts faster and reducing the amount of money going toward interest over time. Consolidating debt can also help you budget better by allowing you to have a clear timeline of when you can be debt free.
Q: Who should consolidate debt?
A: Really anyone that has multiple debts. Especially if they are revolving debts with variable interest rates, like credit cards. Or if you have several different types of debts with different rates, payments, and due dates. Rolling everything into one fixed rate loan can help reduce your stress, free up cash, and make budgeting easier.
Q: What are the best ways to consolidate debt?
A: One great option for consolidating debt is with a home equity loan or line of credit. Using the equity in your home typically results in the best rate and terms available. If you do not own your home, fear not, there are several other ways to consolidate.
If you own your vehicle, you can use the equity in it to consolidate debt.
If you do not have collateral, there are still great options. You can use a signature loan, also referred to as a personal loan, to consolidate debt. It does not require collateral and typically has favorable rates and terms.
Another option would be applying for a credit card that offers 0% APR on balance transfers for a predetermined length of time. Check out Kitsap Credit Union’s Visa that has a great introductory rate offer.
Q: Are there resources available if I need help learning how to consolidate my debt?
A: There is an unlimited number of resources available online, but it can quickly become overwhelming or lead you down the wrong path. My recommendation is to visit your local financial institution and speak with a representative face to face. Building a relationship with the people at your financial institution is an often-overlooked step in financial freedom. Having someone available to answer questions, demystify bank jargon, and offer personalized financial advice based off your unique situation is invaluable. Aside from that, I would recommend visiting your financial institution’s website.
However, you decide to approach consolidating debt, just know that you are not alone. We are here to help. I have seen firsthand what people can accomplish when they work with their financial institution toward a common goal. Even if you feel like you’re in a position where your debt is outpacing your income and you feel powerless, please take the time to speak with someone at your financial institution. There is always a path to a better future, but if you don’t take that first step, you’ll always find yourself in the same place. Together it’s possible!
