Five ways to streamline your debt without a consolidation loan

Debt consolidation can be a relief for those with multiple debts, but it’s not an option for everyone. If you want to ease your financial stress without a consolidation loan, here are five alternatives to deal with your debt. 

Can you do debt consolidation without a loan? 

Debt consolidation combines multiple debts—like credit cards and personal loans—so you can make a single monthly payment. People often do this by taking on a new, larger loan and using it to pay off multiple smaller ones. 

However, taking on a new loan isn't right for everyone. Some people are better off consolidating existing debt without a loan. 

How to consolidate debt without a loan

1. Go through your bills to calculate the amount you'd like to consolidate.

2. Carefully study each of your consolidation options. 

3. Decide which strategy best suits your budget.

4. Stick with the plan like glue. As long as you don't take on any new debt, each month brings you closer to being debt-free. 

If you want to ease your financial stress without a consolidation loan, here are five alternatives to handle your debt. 

• Debt relief program

• Debt management plan

• Debt snowball

• Debt avalanche

• Debt blizzard 

Here’s how to consolidate debt without a loan

Let's take a closer look at what each of these options involves. 

Debt relief 

Debt relief means negotiating with creditors to pay less than you owe. The idea is to negotiate with your creditors to let you pay off your debt for less than the full amount you owe and forgive the rest. This is a possible strategy for someone who genuinely can’t afford to repay their debts without some amount of debt forgiveness.

You can resolve debts yourself or hire a professional debt relief company like Achieve to do it for you. 

Who it’s for:

Debt relief is for people with serious debt problems. Most creditors won’t consider lowering your debt unless you're experiencing a financial hardship that makes it unlikely that you’ll be able to repay your debts without some degree of forgiveness—and you're already behind on payments. 

How it works:

It’s common to offer a one-time lump sum that’s lower than the total amount you owe. If the creditor accepts the offer, the debt is considered satisfied. If you don’t have a lump sum to offer, you would need to save that up first. If you work with a legitimate debt relief company, they will help you set up a dedicated account for this purpose. Also, some creditors will agree to a payment plan. 

Debt relief is not a loan.

What to expect:

Debt relief could reduce the amount you owe, which could help you get rid of your debt faster than by making minimum payments. Also, the monthly payment into your dedicated account might be lower than the total of all the monthly payments you currently pay. That could improve your cash flow. There’s no minimum credit score required for debt relief.

If you miss payments while you save money to offer your creditors, they will likely have a negative effect on your credit. Resolved or settled debts are less favorable on your credit reports than accounts paid as agreed. A debt relief program can’t stop collections, and creditors might sue you. Reputable debt relief providers can provide or refer you to legal support. 

Most people can complete a debt relief program in two to four years.

Achieve is not a Credit Repair Organization and doesn't provide or offer services or advice to repair, modify, or improve your credit.

Debt management plan (DMP)

A debt management plan, or DMP, is a payoff plan. Like a debt consolidation loan, a DMP could help you get rid of your debt by making a single monthly payment. But DMPs aren't loans. Nonprofit credit counseling agencies run these programs, and creditors fund the agencies. Creditors want to be paid back in full, but if you enter a DMP, they might be willing to lower your interest rate or waive some fees. 

Who it’s for:

DMPs are for someone who wants to pay off their unsecured debts in full and can afford to do so in three to five years. A DMP could be good for someone who needs help organizing their finances and learning how to manage their credit.

How it works:

You make a single monthly payment to the agency, and the agency distributes the money to your creditors. DMPs typically require you to close all your credit card accounts. If you miss a payment, your creditors may stop participating in your plan.

What to expect:

DMPs typically include budgeting advice. You might be able to get past-due accounts re-aged (brought current). There’s no minimum credit score for a DMP.

A DMP doesn't reduce what you owe, and you’ll have less access to credit while you’re in the program. Closing your credit accounts with outstanding balances is likely to have a negative effect on your credit profile. 

Paying off your debts in full over three to five years often means a high monthly payment. Make sure you can fit it into your budget.

DIY methods 

Some do-it-yourself tactics take different approaches to paying down debt. All these ways to pay off debts start with listing your debts along with the interest rates and the current outstanding balances. 

Debt snowball 

With the debt snowball method, you pay as much as you can toward the smallest debt (regardless of the interest rate). You continue making minimum payments on the others. 

Once you pay off the first debt, you add its payment to the minimum payment you were making on the second-smallest debt. That should make the monthly payment on this debt even bigger than the payment you made on the first debt. This is how your debt payoff plan snowballs. The payments should get bigger every time you knock down a debt. 

You continue to work your way down the list of debts until all your debt reaches zero. 

The main draw of the debt snowball method is that you get the quickest win by focusing on the smallest debt. That could help you stay motivated to pay off your debts. Hitting milestones counters debt fatigue and could give you the momentum you need to keep going.  

Debt avalanche 

With the debt avalanche method, you still focus on one debt at a time, but you start on the debt with the highest interest rate (no matter the amount you owe). Once that’s paid off, focus on the debt with the second-highest interest rate. You keep going until ‌you’ve paid all your debts. 

The main benefit of the avalanche method is that you could save money. If you don’t add to your debt while you’re in payoff mode, you could get rid of your debts faster using this method compared to the snowball method (typically about a month). But paying off your first debt could take longer.  

Debt blizzard method

The lesser-known debt blizzard combines features of both the ‌snowball and avalanche debt payoff methods. You pay off the smallest debt first for a psychological boost. Then you pay off the debt at the highest interest rate. From there, you stay with the avalanche method until you’re done.

All the DIY routes use your money, not loans. 

You’ll reach your goal faster if you reduce your spending to free up cash and focus on your debt.

How to choose

Choosing the best way to consolidate bills means weighing several factors, including:

• Monthly budget. Only you can determine a monthly amount to allocate toward debt repayment. Some methods require aggressive payments, while others are a bit more flexible.

• Motivation. If you’re focused on saving money in the long run, the debt avalanche plan may work for you. However, if you’re looking for a quick win, you may prefer the debt snowball.

• The amount of time you can dedicate. Some methods demand more of your time. For example, if you go with DIY negotiations, you’re likely to spend hours on the phone as well as using other methods of communication. Think about how much time you have before you begin. 

• Your willingness to play hardball. If you’re asking for partial debt forgiveness, you might have to work pretty hard to come to an agreement with your creditors. Negotiations can be lengthy and stressful.

• Your financial situation. If you genuinely can’t afford to repay your debts, you might need to look at solutions that reduce the amount you owe: debt relief or bankruptcy.

What bills can you consolidate?

One benefit of consolidating debt or committing to a DIY payoff plan is that just about any bill can be included. This includes:

• Credit card debt

• Medical bills

• Personal loans

• Student loans

• Payday loans

• Auto loans

• Utility bills

• Home equity loans

• Collections accounts

It's essential to note that debt management plans and debt relief typically focus solely on unsecured debts, such as credit cards, medical bills, personal loans, debts sent to collections, and other similar unsecured debts. 

Debt relief and DMPs typically don't deal with secured loans, such as auto loans, home equity loans, or any other loan secured by collateral. Debt management plans and debt relief programs also don’t help with most student loans.

Tips for debt consolidation

Here are some helpful pointers for getting rid of debt: 

Build an emergency fund. Even if you’re paying down debt, develop the habit of putting some money aside. Stashing cash could help you avoid adding new debt. The Achieve MoLO app connects your accounts and tracks your income and expenses to help you find Money Left Over (MoLO) each month. Save a small emergency fund, then pay down your debt, then keep building your emergency fund.

Make consistent payments. No matter what debt strategy you choose, always pay on time. On-time payments let you make steady headway against your debt. 

Look for ways to increase income. If you can, find ways to earn more money. If time permits, consider picking up a short-term seasonal job like delivering groceries a few evenings a week, or selling unwanted items online. 

Set financial goals. Create a plan and be intentional about your spending. The Achieve GOOD app can help you drum up a smart debt payoff plan and get debt-free on your own.

Find an accountability partner. This could be a coach, friend, or family member you can check in with regularly to help you stay on track.