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Borrowing money can be necessary when making large, milestone purchases like a home or car, or paying for college. It does mean that you’ll take on debt, but using that debt wisely can help you get through times when money is tight and you’re not just aiming to get by—but to eventually get ahead. If you find yourself in a situation like that and need to borrow money now, here are some ways to manage debt wisely:

Review Your Auto Loan Rate

Are you making payments on a car loan? Check out current auto rates to find out if you could save money by refinancing. Reducing your vehicle loan payment could free up funds to pay down other debts or simply give your budget a little breathing room.

Refinance Your Mortgage

Find out if you could lower your payments and save money by refinancing your mortgage to a lower rate or shorter term. If you have equity built up, you may have an option for a cash-out refinance. With a cash-out refinance, you borrow money against the equity in your home. This can be an efficient way to borrow money and pay off other higher-interest-rate debts. But you also risk taking on more debt if you’re unable to repay it. Before you make a decision, take time to learn more about your options and when it makes sense to refinance.

Defer Student Loan Payments

If you have student loans, review your student debt as part of the bigger picture. Student loan debt is often the lowest-rate loan people have, so it may be wise to focus on paying off other debts first. Monthly payments for federal student loans have been placed in a forbearance from March 13, 2020 to Jan. 31, 2022, which allows you to temporarily stop making monthly payments. Contact your loan servicer to learn about payment deferral, forbearance and other flexible repayment options for your student loans.

Be Wise With Credit Cards

Borrowing money on credit cards can provide a temporary solution when money is tight, but you don’t want to rely on credit cards to cover expenses for an extended period of time. Good credit habits, like paying on time and keeping a low balance, can help you build a positive credit history. Try these tips to keep credit card debt under control:

  • Compare the interest rates on your credit cards and consider applying for a low-rate card with a balance transfer option.
  • Keep up with minimum payments (or more) each month, if possible.
  • If you’ve had problems getting approved for credit before, you may be able to build your credit with a secured credit card. A secured card provides access to credit that’s secured by an amount you have on deposit in a savings  account.

Apply for a Personal Loan

You might consider taking out a personal loan if you need to borrow a set amount of money to pay for home repairs, medical bills or other large expenses. The rate is usually lower than a credit card and must be repaid over a set period of time, whereas a credit card provides access to revolving credit as long as the account is in good standing.

Consolidate Debt

If you have several credit cards and other loans, you may be able to consolidate those debts into one payment at a lower interest rate. Consolidating your debt helps simplify. You’ll only have one payment each month instead of multiple payments and due dates.

Avoid Payday Lenders

Payday lenders charge outrageously high rates and fees to give you an advance on your paycheck or stimulus payment, which puts you at risk for owing more money than you can repay. Payday loans cost a lot of money, and some of them are scam operations that take advantage of those going through difficult financial situations. Don’t fall into a trap of risky payday loans—instead, work with a lender from a financial institution you trust.

Talk to a Financial Counselor

If you need help dealing with debt, seek guidance from a trusted financial professional. A financial counselor at Navy Federal can help you create a debt management plan and refer you to debt counseling services.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.