in this video I’m going to show you
through the right way to do debt
consolidation you know there are a lot
of companies out there on the internet
vying for your highballs trying to sell
their product to you but I’m here to
tell you that if you do debt
consolidation in the wrong way you’re
likely to be still in debt and maybe
even have more debt than when you
started with make sure to stick around
all the way to the end of the video
because I’m going to share with you each
and every step you need to take to do
debt consolidation the right way let’s
get started what’s up you guys welcome
back to the channel my name is Joe on
this channel we talk about all things
personal finance that help people and
affect people like you and me the
average Joe whether that is how to
consolidate your debt the right way
whether it’s how to pay off your debt
whether it is how to budget for the very
first time how to save for your
retirement how to save for your kids
college and every single thing in
between that’s what we talked about on
this channel okay so how do we do debt
consolidation the right way it all
starts with the right mindset for the
future what is the goal what is the
purpose here it is to not just
consolidate your debt it is to get rid
of your debt and if you want to get rid
of your debt you have to start with the
very first thing that’s gonna make it
all possible and that is you must have a
budget remember in case you forgot
you’re in debt you are unlikely in
credit card debt or other types of debt
with high rates of interest which means
your day to day your monthly your annual
activities are causing you to be more in
debt each and every year and that means
we need to shift how we do things each
and every day that means having a
written budget not only that you follow
but one that’s gonna set you up for
success that’s gonna allow you to open
up some of your income each month so
that you can pay off your debt this debt
consolidation plan doesn’t work if you
aren’t paying off your debt along those
same lines besides having a written
budget you must make a commitment to
getting rid of your debt as quickly as
possible
the
is not some sort of easy and just
comfortable smooth ride to getting rid
of your debt it is choppy it is focused
it is intentional get rid of it as
quickly as you can so before you even
get started make sure you take the time
set the time aside to build a written
budget that is based on your actual
income that is going to account for your
actual expenses and make sure that that
budget allows for you to be paying
hundreds if not thousands of dollars
each and every month towards your debt
the other thing you must do before you
get started is take each and every one
of your credit cards and cut them up or
torch them with a flamethrower or
destroy them as some sort of a trash
compactor I’ll I don’t care what you do
with them except you must destroy them
we are on a path of getting rid of our
debt and that means making sure we don’t
add any more debt to our lives get rid
of your credit cards you don’t have to
close the accounts if you destroy the
credit card you’re gonna win order new
cards down the road once you are in the
right place financially to use them
responsibly we are nowhere near there if
we’re talking about debt consolidation
destroy the credit cards okay so when we
talk about paying off our debt as
quickly as possible there are two main
methods that I’ve detailed in previous
videos called the debt avalanche method
and the and the debt snowball method
these methods work with the existing
accounts you already have and don’t
involve debt consolidation you can be
perfectly successful with these methods
instead of consolidating your debt so if
you want to look more into the debt
avalanche method or the debt snowball
method make sure to check out the links
in the videos in the description below
and I’ll throw up a card in the video
right now above and that will help you
walk through those steps to pay off your
debts with the accounts who already have
that being said there is a faster way to
do it that’s gonna save you even more
interest and potentially even more time
there are two main methods to do this
the first is utilizing a credit card
with a 0% interest rate and with a 0%
balance transfer fee those are two
important keys to this there’s no point
in opening up a new credit card if it
doesn’t save you interest and it charges
you a lot in fees the whole point of
doing debt consolidation is to lower
your fees and to lower your interest
rate so you want to look for a credit
card that you can get a
proved for that has low if any fees and
number two has a long period of an
initial interest rate that is 0% that’s
gonna lie to not pay monthly interest
and actually get rid of the debt as
quickly as possible there are a lot of
credit cards out there that do offer a
zero percent interest rate for the first
nine months 12 months 15 months 18
months even but there are very few
credit cards out there that offer a zero
fee balance transfer and what that is is
when you transfer a balance from a
different credit card to this new one
a lot of credit cards out there well for
that initial interest rate of 0% but
they will charge you a balance transfer
fee of around at least ten dollars if
not a full three to five percent of the
amount that’s being transferred and that
can be a large amount of money let me
show you what I mean so like I said
we’ve got number one a credit card with
0% rate and no gun balance transfer fees
think about it this way let’s say that
balance that you have is we’ll call it
$10,000 well $10,000 times was it
what is a 5% we’ll say worst case
scenario well in this case that’s what
$500 that’s a lot of money and fees
probably more than you’re gonna pay an
interest so we want to avoid cards that
are gonna have a large balance transfer
fee and so there’s only one credit card
that actually meets these requirements
that I’ve been able to find recently and
that is the Amex
American Express everyday
so the AMEX everyday credit card meet
these requirements number one it has 0%
balance transfer fee as long as it’s
done within sixty days of opening the
account that should be doable boom
second up 0% interest for 15 months it’s
pretty good not the best out there but
then again this was the only one I found
that would do the zero dollar balance
transfer fee not only that zero dollar
annual fee the Amex everyday credit card
meets all the things all the
requirements that we’re looking for it
doesn’t have very good rewards it’s like
two points for supermarkets or groceries
and one point for everything else point
is we’re not doing this for the points
we’re doing this to get rid of the
existing credit card debt that we have
definitely if you can get a proof of the
Amex everyday credit card if we’ve
already made the commitments that we’ve
made with respect to credit cards we’re
getting cutting up our existing credit
cards we are making a commitment to
paying off our debt as quickly as
possible with a written budget we’ve got
all of that in place we are committed to
getting rid of our debt first step get a
proof of the Amex every day credit card
$0 balance transfer fees balance and
transferable calls be T balance transfer
fee as long as you do it within sixty
days of opening the credit card 0%
interest rate for the first 15 months
after you open the card and $0 annual
fee that’s talking about zero zero zero
zero fees zero interest rate zero annual
fee this is the way to do it if we want
to fit as much of our existing credit
card debt on this account and then
utilize this initial 15 month period to
pay it off as quickly as possible now do
me a favor
I looked for quite a bit of time here
and I only found this card that would do
this if you found maybe a local credit
union or maybe another credit card that
meets these requirements zero dollar fee
zero dollar balance transfer fee and
zero percent interest rate for at least
say 12 months
longer and I missed it make sure to drop
a comment below let me know what that
card is and I will sort of certainly
make sure and correct myself here but I
this is the only one that I could find
and hopefully this is one that’s gonna
work for you as well two considerations
you want to think about before you
immediately put everything you have on
this card is how comfortable do you feel
like how confident are you that you can
get rid of your credit card debt during
those first 15 months because the thing
we want to avoid is paying a large
amount of interest on existing debt and
if you can’t get a good portion that
paid off in those first 15 months then
this might be a problem for you 15
months down the road now we do have a
second option here which might be a
backup planet after 15 months if you
still have existing debt there but the
point is be cognizant of the fact that
interest rate on this card isn’t is
gonna jump after 15 month is probably
gonna be close to 17 20 25 % so we want
to eliminate as much as possible if not
all of your credit card debt during
those first 15 months okay so that
second option we’re talking about is a
debt consolidation loan debt
consolidation it’s a long word loan okay
it’s a personal loan it’s not secured by
any property it’s a personal loan
unsecured and with this debt
consolidation loan we are looking to do
the same thing we were doing with the
Amex everyday credit card which is to
consolidate multiple accounts into one
specific personal loan or debt
consolidation loan with one monthly
payment hopefully paying a much lower
rate of interest than we were on those
other different types of credit cards
there’s two specific benefits we’re
looking for with this number one we want
to have one payment as opposed to
multiple payments
right so if you have three or four
credit cards right now you want to have
just one specific debt consolidation
loan payment and then number two lower
interest rate right otherwise what’s the
freaking point I guess there’s the
convenience of one payment but if we’re
not paying a low rate of interest is it
really worth it to go through this
effort I don’t know if it is so in this
case probably with you have credit card
debt you have an integrative 20 and 25
percent so the goal here is to
consolidate our debts multiple accounts
into one specific payment and with a
lower rate of interest a lot of the
companies out there that have these
personal loans these debt consolidation
loans are offering anywhere from five
point nine nine percent up to twenty or
twenty five percent so the goal here the
only reason to pull the trigger on this
is if you can get that lower rate of
interest okay so there are two specific
companies that I found in there I’m sure
there are a lot more but two that I
found that really stood out of personal
loan companies that are offering
personal loans debt consolidation loans
that are offering some pretty good deals
right now we’ve got Marcus by Goldman
Sachs and you also have the discover
personal loan as well both of these have
the offer of low interest rates fixed
interest rates and that’s the other part
of this with credit cards you have a
variable rate of interest with these
specific debt consolidation loans you
should have a lower rate of interest and
it should be a fixed rate these
companies also had no or very low fees
to open up the loan as opposed to
something like a peer-to-peer lending
company which we’ll talk about in a
second so with this we’ve got option a
would be Marcus Goldman Sachs and be it
would be discover I’m sure there are
more but these are the ones that are
pulling out here make sure to drop a
comment below if you’ve got some other
recommendations other companies you had
experience with that worked well with
consolidating your debt
Marcus bug Goldman Sachs and they
discover personal loan both of these
companies are going to offer fixed rate
no fees to open it up and rates will be
anywhere from five point nine nine
percent and depending of course on your
credit profile which we talked
extensively about in the past and odds
are if you have a lot of existing
consumer debt specifically credit card
debt you probably are not gonna get the
best interest rate if we’re being honest
here maybe you will if you have a great
on-time payment history and maybe you
have low to medium credit utilization
but it likely you’re gonna see something
above five point nine percent again you
don’t want to pull the trigger on this
unless you can get an entry that’s lower
than what you’re paying right now okay
so option number three is utilizing
peer-to-peer lending there are multiple
sites out there that offer peer-to-peer
lending where you can do good debt
consolidation loans problem with these
are you’re gonna get comfortable
interest rates may be as low as five
point nine percent but definitely much
higher than that
and they’re gonna charge those pesky
origination fees somewhere around 1% of
the amount that you’re borrowing which
can actually be a large amount of money
okay so what’s the goal with all this
the goal is to get out of debt
surprised get out of debt that’s our
goal here our goal is not to get fancy
or cute with this we want to get rid of
our debt as quickly as possible and the
reason we’re talking about debt
consolidation loans at all is because it
helps cut some of the time and the
interest out of it so remember we want
to start with written budget we’ve got
to have a written budget that we are
sticking with that we’re following that
always wins you must have a written
budget that you follow each and every
day each and every month number two we
want to start with the AMEX every day
credit-card because of that 0% annual
fee the 0% initial interest rate for 15
months as well as zero dollars in
balance transfer fees as long as done
within the first 60 months that’s the
first option we want to utilize and then
after that we want to utilize a debt
consolidation loan debt consol
companies like marcus by goldman sachs
as well as discover are gonna be great
options I’m sure there are others out
there that can get you that low fixed
interest rates compared to your credit
cards of course remember we want to get
rid of our credit card debt as quickly
as possible and utilizing a debt
consolidation loan the right way
starting with that foundation of having
that commitment to get rid of your debt
as well as utilizing a written budget is
gonna get you there
remember debt consolidation only works
if you’ve made a commitment to not get
any more debt so we’re utilizing your
credit card here but only to move our
existing debt and then attack that as
quickly as possible if you’ve not made a
commitment don’t do this because it’s
just opening up your other cards to
reuse them again there is a specific
responsible way to utilize credit cards
and obviously if we’re talking about
debt consolidation we don’t know what
that is yet so make sure that we take it
one step at a time make sure that we’re
getting rid of our debt as quickly as
possible and then once we do that once
we are good with our written budget we
are saving money each and every month we
are getting ourselves our family in a
great position financially then we can
talk about utilizing credit cards safely
responsibly to utilize those those
rewards and those benefits that they can
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