There are many debt consolidation companies that you can turn to for help but unfortunately you may have already experienced yourself that if your loans are secured or your debt is not high enough, you won’t qualify for a consolidation loan. What you could do is take out another bigger loan to pay off all your debt and then pay only one monthly bill. But then again, you will have to have a good credit score to be able to get another big loan for this.

To consolidate your debt without a loan, there are several things that you need to do or not do. Here are the steps you need to take:

Focus on improving your credit score

First of all, do not apply for more than one debt management companies. This may hurt your credit score. What you need to focus on is improving your credit score and not wreck it even further. One way to do this is by paying your bills on time. If you pay your debt on time every month for at least 6 months, you will see that your score will have improved. Once you have paid all your debt, leave the accounts open but unused. This will also influence your credit score positively. If you really must close your accounts because otherwise you may be tempted to use them again, try not to close it immediately after you pay off your debt. Also remember, do not be tempted to open new accounts in addition to the ones that you have already paid off as this may also hurt your credit score.

Set your monthly budget to pay your debt and then negotiate

To be able to pay off your debt without a consolidation loan, what you can do is negotiate with your creditors. But before you do this, find out how much money you have available each month to pay your debt. Set aside an amount that you can afford to pay all your debt, and decide how much you can pay for each account. As soon as you know your numbers, phone your creditors and negotiate a minimum amount that you can afford to pay. Most creditors will be happy to accept a lower monthly payment than none at all.

Prioritize which account to pay off first

After you have negotiated with your lenders, you will now have a lower interest rate or monthly payment according to the agreement that was reached. With the new monthly payment for each account, you will now have to decide which account to prioritize to pay off first. When you have extra money that you can throw into your account, you will already have decided which account to throw the money into.

You might want to concentrate on the account with the least amount of debt in it. This account will be paid off earlier and if you put extra money into it, it will be paid off even sooner. Once you paid this account off you will feel good about yourself to finally have gotten rid of one account. Then the amount of monthly payment that you would put towards this account can go to another account with the next least debt in it.

You can also choose to prioritize accounts that has the highest interest rate. By putting your extra money into this account you will pay off your debt in this account faster and therefore save money in the long run. Whatever your consideration is to choose which account to prioritize, just decide which and stick with it. This way, you will rapidly eliminate one debt account at a time.

Finding extra money

You may be surprised that you don’t really have to have a second or third job to get the extra money that you need to pay off your debt. If you are strict with yourself about your financial well-being, you should start tracking your expenses and make a monthly budget. This way you will see where all your money went and what expenses you can cut on. The money that you can save from not smoking or drinking or less snack or less dining out is your extra money that you can use to help pay off your debt.

If you have time, a second job or part time job will definitely help you.

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