Start Consolidating credit card debt into line of credit

Consolidating credit card debt into line of credit

A loan with a longer term may have a lower monthly payment, but it can also significantly increase how much you pay over the life of the loan.

Debt consolidation is nothing more than a con because you think you're starting with a clean slate.

But the truth is the debt is still there, as are the habits that caused it—you just moved it!

You can’t borrow your way out of debt in the same way you can’t get out of a hole by digging out the bottom.

Getting out of debt isn’t quick or easy, but it’s the first step to achieving lasting financial health. It simply means you’re taking out one loan to pay off a bunch of loans—or consolidating the debt to one payment.

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"The theory of turning higher debt rates (credit cards) into lower ones (mortgage) is a great idea," says White in an e-mail, "but it usually doesn't work because many of the people who end up in this situation have a habit of spending without conscious decision making." Gayle and Jim Mc Weeney are determined to break that habit.

They refinanced their New Jersey home in July, rolling $30,000 of credit card and car loan debt into their 30-year fixed-rate loan.

"I would only suggest this as a last-gasp strategy," says Susan Reynolds, author of "One-Income Household." "In general, rolling credit card debt into mortgage loans is not a good idea. If you renege, they can pester you for payment and ding your credit report, but they cannot confiscate your home." Todd Huettner, president of Huettner Capital, a mortgage brokerage specializing in debt consolidation, advises homeowners to answer three questions before rolling debt into a home loan: After working with nearly 5,000 families, Susan White of Plan Plus Inc.

You will pay significantly more in interest over the life of the homeowner's loan than you would if you chipped away at your credit card debt over a period of three to five years. has her own reasons for advising against rolling debt into home loans.

"We were property-rich and income-poor," says Jo Ann.