Do you have equity in your home?
Do you also have credit card or other consumer debt such as a car loan?
If you answered yes to both above questions, you should consider using the equity in your home to retire all consumer debt.
The Advantages of Debt Consolidation
- You will pay a far lower interest rate. The less amount of your payments going for interest, the more that's going to principle and will pay-off the debt sooner.
- The interest may be tax deductible. The interest on credit cards and auto loans may not be deductible unless used for the production of income (a business or farm for example). If you pay $5,000 in interest expense that is not deductible, you may have to work and earn $7,000 in order to have the $5,000 after taxes to pay. If you can deduct the $5,000 it may save you $1,500 in taxes, so it really only cost $3,500. So the difference between $7,000 and $3,500 or $3,500 is the true financial difference.
- You most likely will lower your monthy outgo. With a lower required monthly payment you can take advantage of the cash flow or continue paying the higher amount and retire it even sooner.