Debt Does Not Have To Be Your Reality

Don’t let debt be your reality.

By Glen McKenzie

Many view a new year as a new beginning. Just think about the increase in health club memberships and diet crazes that thousands rush into every January. As you begin a new year, are you thinking about a healthy financial future?

You can start by making a list of all the debt you have accumulated with notes on the balances and interest rates. Include credit card debt, student loans, home, auto and personal loans. You can make this a year to get out of debt or take big steps in reducing it.

Sit down with someone you trust, perhaps at your credit union or bank, and see if there are options that might make sense. Depending on your level of debt, some options include:

  • If you are a homeowner, a home equity loan.
  • A personal loan for debt consolidation.

You may want to consider a home equity loan. Here, you are using the equity that you have accumulated in your home to pay off high interest rate debt.

Home equity loan rates are much lower than credit card rates; remember that this can be a risk because you are paying off unsecured debt (credit cards, loans, etc.) with money secured by your home.

For those who may not have equity built up in their homes, another possibility is a debt consolidation loan. You combine all outstanding debt into a single loan. With a debt consolidation loan, you will have one loan payment instead of multiple payments every month. You may save money because the interest rate could be lower.

There is no quick fix to get out of debt. Here are some thoughts on what you can do:

  • Create a detailed budget for each month and do not deviate from the plan. Living on a budget is critical to reducing your debt.
  • Look at your next credit card statement. It will show you how long it will take to pay off the card by making only minimum payments each month. Often, it can take more than a decade depending on how much you owe. Pay off the smallest debt you owe first. Once paid off, take that payment amount and apply it to the next smallest debt, etc.
  • If you get any extra “unexpected’ money throughout this year, immediately apply it to your debt.

It may take some time, effort, and sacrifice but it will be well worth it in the end. We hope these ideas will help you. If we can ever assist you, please give us a call at 940-387-8585.

Glen McKenzie is President/CEO of DATCU Credit Union. For more information call 940-387-8585 or go to