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Published on August 28, 2020

10 Recession-Proof Debt Consolidation Tips

10 Recession-Proof Debt Consolidation Tips

The journey to paying down your debt can be challenging in the best of times. It can be even more complicated when you’re balancing the effects of a global recession.

Many Americans are facing immediate financial uncertainty from losing their jobs or being underemployed. The economic repercussions of this pandemic recession will be felt for years to come. Although becoming debt-free might not be your top priority during this difficult phase, you should still take steps to maximize your money.

Here are some debt consolidation tips to help recession-proof your finances.

1. Ask Your Creditors to Lower Your Interest Rates

The first on this list of debt consolidation tips is asking your creditors to lower your interest rates. Many borrowers don’t realize they can contact their existing credit card providers at any time to request a lower interest rate.

This often-overlooked tactic is a quick and easy way to reduce your debt burden, and it may result in a permanent or temporary (e.g. 12 months) interest rate reduction.

Creditors are more likely to say “yes” if you have a history of on-time payments or if your credit score has recently increased. Even if that’s not the case, the worst thing your creditor can do is say “no.”

If you aren’t successful in lowering your interest rate, don’t hesitate to ask again after a few months or after receiving lower offers from competitors. Credit card providers can issue reductions at their discretion, but it’s up to you to initiate the request.

2. Pause Low-Interest Loans to Tackle High-Interest Debt

High-interest loans and credit cards can prevent you from climbing out of debt. Although you’re hard at work making payments, interest charges are continuously accruing. This interest can quickly eat away at your monthly payment instead of chipping away at the principal balance.

To help make some headway in repaying your debt, see if you can pause payments on your lower interest loans. Then, devote those funds to your higher-interest debt. This lets you eliminate your balance faster and save you from unnecessary interest charges.

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Options for loan deferment vary by lender. In some cases, lenders might offer an interest-free deferment. Other lenders might continue charging interest on your loan during deferment.

Contact your lender to determine if deferment is available and for how long. Even a pause of two to three months can help you put a noticeable dent in your high-interest debt.

3. Consider Using a Balance Transfer Credit Card

You can quickly reduce your overall interest by taking advantage of low or 0% APR balance transfer credit cards. By transferring your existing balance from a higher interest card, you can save money and pay down your balance quicker.

A low-interest rate or promotional offer, however, might come with an additional cost in the form of a balance transfer fee.

For example, a creditor might offer 18 months of 0% APR when transferring a balance from another card. This perk typically comes with a 3-5% balance transfer fee that’s calculated based on the transfer amount. In this scenario, you could tack on up to $300 to $500 in transfer fees if you transfer an existing $10,000 balance to a new card. You’ll need to weigh your potential savings versus the transfer fee to determine if this is a good debt consolidation strategy.

Additionally, your new card might have transfer limits or a short introductory period before a higher interest rate kicks in on any remaining balance. Be sure to read the fine print and stick to your repayment strategy, so it doesn’t end up costing you more in the end.

4. Refinance With a Lower Interest Rate

Whether it’s your mortgage, student loans, auto, or other consumer debt, you might find a lower interest rate by refinancing your loan. Refinancing is one of the most helpful debt consolidation tips you should know.

Refinancing replaces your existing loan with a new loan—usually with a lower interest rate or better terms. You might qualify for a better rate than when you originally took out the loan if your credit score has since improved or if consumer loan rates have dropped.

Mortgage and student loan refinancing rates are at record lows since this pandemic began, which is a small silver lining in otherwise tragic health and economic crisis.

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The bottom line is if you can find a lower interest rate for any of your loans, take action. Remember, there might be associated refinancing fees or closing costs depending on the type of loan and lender.

5. Ask About Loan Modification

In some cases, you can benefit from modifying an existing loan instead of refinancing it into a new loan—particularly if you need immediate relief due to financial hardship.

Depending on the type of loan, the refinancing process can take months, as is the case with some mortgage refinancing options. Loan modifications, however, can be processed in a short period.

Loan modification can make your payment more manageable by reducing your interest rate or lowering your monthly payment. It can also extend your loan terms, which typically costs you more money in the long-run.

Contact your lender to explore loan modification opportunities. Always make sure you fully understand the terms and structure of your modified loan before moving forward.

6. Shop Around for the Best Loan Consolidation Quotes

If you have high-interest debt, you may be able to consolidate multiple balances into one low-interest loan. This can save you on interest fees, but it can also streamline your payments into one due date, which can prevent missed or late payments.

It’s best to grab quotes from at least three lenders any time you’re consolidating or refinancing your debt. By comparing multiple offers, you’re getting the best current rate since lenders are competing for your business. I recommend shopping around for all types of loans, especially for better student loan rates.

Student loan debt, totaling more than $1.64 trillion in both federal and private student loans, surpasses all other forms of debt in the U.S. apart from housing debt.[1] Because of this, there are plenty of opportunities to refinance or consolidate your student loans.

If you already have private student loans, you should be shopping around for better interest rates at least once per year. Lowering your interest rate is the priority, but also compare origination fees, repayment terms, and any available cashback offers to pay down your debt further.

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If you have federal student loans, the decision gets more complicated. Depending on your financial situation and career goals, it might be more advantageous to keep your existing federal student loans due to their various protections (e.g. deferment and forbearance), flexible income-driven repayment plans, and available forgiveness programs.

7. Work on Improving Your Credit Score

Before consolidating a large amount of debt, take steps to improve your credit score. The higher your credit score, the better interest rates you’ll be offered.

Common ways to improve your credit score include:

  • Disputing any errors or outdated information on your credit report
  • Paying off smaller credit cards and keeping your loan balances low
  • Refraining from applying for new credit accounts in a short period
  • Keeping revolving credit accounts active

These actions can help lower your credit utilization rate while maintaining your credit history length. Both are important factors in determining your credit score.

8. Cancel Any Small Credit Cards After You Consolidate Debt

Another often overlooked debt consolidation tip is canceling small credit cards. If you use a debt management program or a debt consolidation loan, you might be required to close certain credit card accounts as part of the agreement. This gives the lender more confidence that you won’t run up new balances and increases the likelihood that you’ll repay the debt.

Even if you choose a different method of consolidation, it’s a good idea to cancel your smaller or newer credit cards by choice—or cut them up—to discourage you from using them.

9. Run a Credit Check to See If You Forgot About Any Debt

With endless opportunities to borrow money, payments can slip through the cracks. Check your credit report periodically to ensure you haven’t forgotten about a small loan or debt.

For example, you may find that a medical bill has been sent to collections without ever physically receiving a notice because it was sent to a previous or incorrect address. Perhaps you simply forgot about a loan that has an old email on file. You could be in default without realizing it.

You’re entitled to one free copy of your credit report from each of the major credit reporting companies—Equifax, Experian, and TransUnion—every 12 months.

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By keeping an eye on your credit report, you can head off any surprises and actively resolve any financial issues that arise.

10. Sign Up for a Budget-Tracking Service

An often overlooked debt consolidation tip is signing up for a budget tracking service. It’s easy to become detached from your money when you’re swiping your credit card instead of paying with cash. This psychological separation leads to overspending and more debt.

Free and paid budgeting tools can help you reconnect with your finances and keep you accountable along your journey. Platforms, like Mint or You Need A Budget (YNAB), can help track your expenses and give you a big picture view of your finances.

There are many free and paid budgeting tools out there, so find one that matches your financial needs and goals.

Debt Consolidation Efforts Won’t Solve All of Your Problems

Although these debt consolidation tips can help you save on interest and streamline your debt payoff strategy, it’s only one piece of the financial puzzle. If you’re spending more than you’re earning, you’ll continue to get trapped in the debt cycle.

Start by setting a realistic budget, which might include significant lifestyle changes. You might need to trim down some of your expenses or find a way to bring in additional income. By relying less on credit to make ends meet, you’ll reduce the likelihood of repeating the debt cycle.

More Tips for Better Financial Management

Featured photo credit: Sharon McCutcheon via unsplash.com

Reference

More by this author

Travis Hornsby

Founder & CFA, Student Loan Planner

10 Recession-Proof Debt Consolidation Tips What Is a Good Credit Score (And How to Get One)

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Last Updated on April 19, 2021

40 Healthy And Really Delicious Meals You Can Make Under $5

40 Healthy And Really Delicious Meals You Can Make Under $5

Ever had those moments where you really wanted to eat something delicious and healthy but didn’t have the financials means to do so? Whether you’re a student or parent, this compilation of 40 great, healthy, and inexpensive recipes will make every night special and help you get fit! No more meals where you have to force the food down! It’s time to make that budget your best friend and turn it into great recipes. Enjoy!

1. Fish Tacos in Crunchy Shells ($3.56 per serving)

Is there a better way to end the day than a Fish Taco dinner filled with protein and nutrients and is easy on the wallet? This recipe calls for a boys’ or girls’ night in front of a good movie or game.

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    2. Mini-Meatball Noodle Soup ($3.43 per serving)

    We’ve heard of the delicious spaghetti and meatballs recipes, but imagine having that same meatball goodness in a soup? It’s like Christmas in a bowl. Healthy, warm, and only $3.43 per serving.

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      3. Spaghetti and (Vegan) Meatballs ($2.13 per serving)

      Now it’s time to look at the traditional spaghetti and meatballs recipe, but with a little twist: vegan meatballs. This way, you can enjoy the Italian tradition without adding on the extra calories. I’m sold!

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        4. Kabocha Squash and Lentils ($3.12 per serving)

        Absolutely delicious way to end the day with a Kabocha Squash and lentils dinner. The beauty of this recipe is that you can actually make many other things from the mixture, from dips to full-on meals. All under $5 per serving.

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          5. Baked Coconut Lentils ($0.91 per serving)

          Coconuts are always a good idea, but it doesn’t have to be eaten only for dessert or breakfast. With this great recipe, you can now eat a lunch or dinner filled proteins and a coconut twist. Yum!

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            6. Easy Marinated Roasted Chicken ($3.40 per serving)

            We love chicken and at less than $5 per serving, we are in heaven with this recipe. Add some vegetables and rice on the side and you’ve got yourself a full meal!

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              7. Organic Greens and Goat Cheese Gratin ($2.36 per serving)

              This is absolutely divine. You get in your healthy greens and your fat macros with this great recipe. Takes only a few minutes to make and it’s easy on the wallet. Bon Appetite!

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                8. Beef Pot Roast ($3.22 per serving)

                One word: perfect. This meal will warm your insides and fill you up with the high protein content.

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                  9. Fajita-Style Quesadillas ($0.43 per serving)

                  If you want to eat Mexican tonight but want to stay in your budget, this Quesadilla recipe is your best friend. It’s tasty and filled with healthy ingredients for less than a dollar per serving.

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                    10. Fish Tostadas with Chili Lime Cream ($2.82 per serving)

                    Another great lunch idea for the busy days ahead. Prep this in the morning or the night before and you’ve got yourself a healthy and cheap lunch meal!

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                      11. Beef and Black Bean Chili ($1.36 per serving)

                      Might not look like much, but this amazing chili is actually extremely healthy for you. The protein from the beef and the carbs from the black beans will fill you up in no time, and keep you full for a long period of time. Delicious and warm, just right for the winter!

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                        12. Crispy Fish and Peppers ($2.18 per serving)

                        Amazing recipe for anyone looking to change up their meals while keeping their macros in check and not going overboard on spending. Satisfies your crunch tooth (see what I did there?) and gives you all the protein you need to stay full and lean.

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                          13. Vegetarian Gumbo ($1.50 per serving)

                          You have the perfect macro mix here with the carbs, fats, and proteins. At less than $5 per serving, you’ve got yourself a meal that will last for the whole week!

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                            14. Mexican White Bean Soup ($0.99 per serving)

                            With the cold weather creeping in, it’s not a surprise that soups are coming back in style. This great Mexican White Bean Soup dish will keep you warm for winter without making a hole in your pocket.

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                              15. Black Beans with Mango & Cilantro ($0.38 per serving)

                              Mangoes make every dish a little bit sweeter, which is why we absolutely love this recipe. A normal rice and bean dish might be a little meh, but add the sugary taste of mangoes and you’ve got yourself a party!

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                                16. Bean Burritos ($0.71 per serving)

                                If you’re having people over tonight and don’t want to spend too much time or money on food, this dish is a great option! You can even cut up the burritos into pieces and make finger foods while everyone’s watching the game or gossiping.

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                                  17. Five-Spice Beef Kabobs ($2.43 per serving)

                                  The spices in this recipes add a delicious twist to the beef kabobs, which is definitely worth trying!

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                                    18. Cornmeal Crusted Pork ($1.92 per serving)

                                    If you like the fried crunch but want to opt for a healthier alternative, cornmeal is your man. This healthy recipe will satisfy all your fried desires without making you pop open your pant’s button.

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                                      19. Chicken, Tomato & Cucumber Dinner Salad ($2.57 per serving)

                                      Easy to do, extremely healthy, and super delicious. A must-try!

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                                        20. Lentil Soup with Beef and Red Pepper ($1.90 per serving)

                                        I can’t believe how cheap this meal is, especially for all the nutrients it contains. You can make a big pot on Sunday night and divide it into small portions to last you a whole week.

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                                          21. Smoky Mushroom Stroganoff ($1.90 per serving)

                                          Craving pasta but not sure what to top it off with? How about smoky mushrooms with a twist?

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                                            22. White Bean Tuna Salad ($1.36 per serving)

                                            You can add this White Bean Tuna Salad in your sandwich or just eat it as-is for a quick lunch on a busy day.

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                                              23. Sausage Eggwiches ($0.80 per serving)

                                              Who says you have to eat fast food to get an eggwich? This delicious recipe will give you an amazingly healthy eggwich for less than a dollar per portion. Can you say Breakfast?

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                                              Sausage-Eggwiches

                                                24. Baja-Cali Black Bean Salad ($1.17 per serving)

                                                Great snack to add to a movie-night with friends. You don’t have to use chemically-processed salsas anymore, you can now use this homemade salad for your chip dips.

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                                                  25. Gnocchi, Sweet Corn & Arugula in Cream Sauce ($2.24 per serving)

                                                  Italians always knew how to make carbs look good! This delicious Gnocchi recipe will give your lunch a whole new meaning. Easy to make and only $2.24 per serving.

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                                                    26. Vegetable Lasagna ($1.73 per serving)

                                                    If you were looking for a healthy lasagna, you’ve just found it. At under $5 per serving, you can fill yourself up right away without putting on the extra calories.

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                                                      27. Fajita-Ranch Chicken Wraps ($2.05 per serving)

                                                      Don’t know what to make for lunch this week? How about delicious chicken wraps with a healthy ranch? This recipe will make all your lunches, even the quick ones, healthy and colorful.

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                                                        28. Quinoa with Pan Roasted Brussels Sprouts ($1.24 per serving)

                                                        A dish that has quinoa and brussel sprouts can’t be unhealthy, it just can’t, which is why this dish is one to keep in the books. Easy to make, healthy, and will keep you full for a long period of time.

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                                                          29. Butternut Squash Chili ($1.04 per serving)

                                                          You don’t need meat to make chili now that you have this recipe! It’s 100% healthy, filling, and smells absolutely delicious.

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                                                            30. Fast Shrimp Bisque ($2.03 per serving)

                                                            Seafood doesn’t have to be expensive if you know how to do it right, and this fast shrimp bisque is a great recipe to try if you’re in the mood for some seafood!

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                                                              31. Chicken-Noodle Casserole ($0.98 per serving)

                                                              Looks divine doesn’t it? This super easy to make dish will satisfy all your taste buds without burning a hole in your wallet or adding a few extra numbers on the scale.

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                                                                32. Burrito Cups ($1.18 per serving)

                                                                Entertaining someone tonight and don’t know what to make as appetizers? These burrito cups are a great alternative to chips or other greasy finger foods. All you need to enjoy it is a spoon and a cup.

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                                                                  33. Lemon-Dill Shrimp & Pasta ($2.45 per serving)

                                                                  Another impressive shrimp recipe under $5 per serving. The lemon-dill twist adds a great taste to the dish.

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                                                                    34. Potato Frittata ($0.87 per serving)

                                                                    If you want to eat potatoes for breakfast but still want it to be healthy, this is the recipe for you. At under a dollar per serving, this potato frittata will make you see potatoes in a whole new light.

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                                                                      35. Grilled Pork and Pineapple ($2.67 per serving)

                                                                      Meat and fruits? Oh, yes. The juiciness of the pork mixed with the liquid sugar in the pineapple will make you wish you knew about it sooner.

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                                                                        36. Greek Honey-Lemon Pork Chops ($2.15 per serving)

                                                                        Another splendid recipe mixing sweet and salty for a healthy meal. Easy to make and absolutely mouthwatering.

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                                                                          37. Jamaican Pork Stir-Fry ($2 per serving)

                                                                          You can add this healthy stir-fry to any dish as a side or amply enjoy it as-is for lunch or dinner. You can even make a wrap sandwich out of it if you’re in a rush to eat.

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                                                                            38. Herbed Salmon ($2.49 per serving)

                                                                            Salmon contains a healthy dose of fats that will boost your metabolism, lower inflammation, and make you happier. At under $5 per serving, need I say more?

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                                                                              39. Five-Spice Pork Kabobs ($1.96 per serving)

                                                                              Exquisite recipe under $5 per serving that will most definitely awe everyone at your dinner party.

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                                                                                40. Stuffed Sweet Potatoes with Mango-Black Bean Salsa ($1.24 per serving)

                                                                                You don’t have to eat sweet potatoes alone anymore with this flavorful recipe.

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                                                                                  Featured photo credit: Featured Photo Credit: 5 Dollar Dinners via 5dollardinners.com

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