Here's part 2 of a series on from Market Watch. The ideas are from Greg Pahl, co-author of "The Unofficial Guide to Beating Debt," and Virginia Morris, co-author of "The Wall Street Journal Guide to Understanding Money & Investing," (one of the books I'm giving away free). Here's their next suggestion:
Home equity loans. They're inexpensive, relatively easy to obtain and they may offer a tax deduction for the interest portion of the loan. The downside is that the collateral for the loan is the house. "A home equity loan can be an extremely useful strategy if it's used properly," Pahl says, "but people need to have their eyes open and understand the implications."
The other disadvantage is the low-pressure repayment terms. "Most lenders aren't in a hurry for you to pay it back. The leisurely repayment schedule isn't part of your goal," he says. "Your new monthly payment should be at least as large as your previous monthly payments -- if you want to really make progress. If you can pay more, you should, because you'll pay it off faster."
In the world of bad choices (which is what debt consolidation is), this isn't a bad one if you just need a bit of wiggle room to get out of trouble. Don't get me wrong, I don't like the option, but it's better than many of the other alternatives.