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How Debt Consolidation Loans Help Simplify Your Debt

Shaun Connell — Sun, 30 Aug 2009 16:12:49 +0000

Does the sound of a ringing phone make you cringe? Does it have to be a number you recognize on caller ID before you will answer it? Do you only check the mail when you are expecting something? Do you get nervous when people ring the doorbell and you have not invited anyone over? If any of this applies to you, then chances are you are completely buried in debt. If you are so overwhelmed by your mounting debt that you do not have any hope of getting out of it, there is a way to regain control of your financial life. Take a few minutes to look into debt consolidation loans.

Debt consolidation loans can do so much more than just simplify your debt. The right debt consolidation loan can give you back something that you may never have thought you would get back, your peace of mind. Go through all that mail you are afraid to open and make the call. Debt consolidation loans can take all of the tremendous number of different creditors that are calling and writing almost hourly and put them into one single payment to be made each month. Just one payment a month and they are all taken care of. That is a simple as it gets.

With the right debt consolidation loan, all of the calls will stop. It will be safe to answer the phone again without being afraid of the unknown numbers on the caller ID. You will be able to check your mail daily without worrying about being faced with all of the people you owe. You will have one loan taken out and it will take care of all of the old outstanding derogatory debt all at once. Then you will simply have one debt that needs to be paid monthly. Your credit rating will instantly look better as derogatory debt is marked as paid and you maintain your regularly scheduled debt consolidation loan payments. Where you were just not too long ago worried how you would make it from month to month, you can actually begin to get back to a good credit rating.

So when you are tired of feeling like you are drowning in debt take a look into the option of a debt consolidation loan to be your lifeline. You could be one phone call away from ending all the stress of overwhelming debt.

How Debt Consolidation Loans Work

Shaun Connell — Sun, 30 Aug 2009 16:10:14 +0000

A business’ balance sheet begins with financial assets, but the balance sheet of your personal finances should begin with your peace of mind. Debt is messy. Debt is complicated. Debt is expensive. But most of all, debt is stressful. If you’ve found yourself juggling bills to make payments, avoiding collector phone calls or just carrying a substantial amount of debt you should consider the advantages of consolidation. Making payments on your own terms, over a time horizon of your choosing can make your life simpler and less stressful.

How Can Consolidation Help Me?

Automated phone calls from “Fill-in-the-blank credit services” or mailed statements with ominous warnings stamped at the bottom can bring an otherwise pleasant day to a screeching halt. Even a well-organized person can find it difficult to keep track of every bill. When credit is involved, the consequences of losing track of those bills may involve a detrimental effect on credit scores and the rate or even eligibility for future loans.
Debt can be extremely expensive. A late payment fee of $35 for a $1,000 credit card balance isn’t simply an additional 3.5 percent interest fee; it is more than a 40% surcharge (3.5% x 12)! A small hiccup in the cash flow of a paycheck to paycheck lifestyle can start a snowballing of debt that is hard to contain. If you consolidate debts, put them on a manageable payment schedule, and adjust to a reasonable interest rate you can stop that escalation.

The advantages of consolidation are changing the time horizon, and simplification. There is no magic. A dollar a year from now is not worth as much as a dollar today. A short term loan company or credit card company will charge you dearly if you cannot produce that dollar today. With consolidation, you structure your debt over a longer time horizon. Payments are made according to what you can reasonably afford now and in the future. You benefit from knowing every month how much you have to pay, and making many of your creditors go away.

Consolidating your debts offers an opportunity to take stock of where you stand financially, and add predictability and stability to those finances. In the process of reducing the complexity you will undoubtedly spare unnecessary expense in the form of late fees, surcharges and simple interest. Your personal finances should begin with peace of mind.

How a Debt Consolidation Loan Will Help You Get Out of Debt

Shaun Connell — Sun, 30 Aug 2009 15:51:46 +0000

If your debts are stacking up, you may wonder just how a debt consolidation helps you get out of debt. The process is fairly simple and straightforward, and there are a couple of ways to accomplish debt consolidation.

One method involves getting an entirely new loan that is large enough to pay off all the other debts. You then have just one payment monthly, and frequently you can get this loan from a bank or credit union at a favorable interest rate. The term of this new loan may last longer than the payoff of all the other debts in order to bring down your monthly payment to a level you can afford. This might be offset by the reduction in overall interest rate. Having just one monthly payment to make, and one due date to remember, may be easier to manage. The financial institution makes out checks to each creditor, which you then forward to pay off the old balances. You should not open new credit or use old cards until this loan is fully repaid, to stay out of future trouble.

Another method which can help you get out of debt through debt consolidation is working with a debt management company. There are several different ways they can work with you. First, they are able to negotiate lower interest rates, fee reduction, and removal of penalties assessed previously. Secondly, some companies will help you manage your debts. They do the negotiations, and then you make the lower payments. You need to agree to not incur new debt while you are making your payments.

A third way the debt management companies can help is to handle your payments for you. They negotiate deals, and you pay them cash monthly and they make payments for you. They do charge a fee for this service, and payments should be made on time by this company. They can make deals with creditors, because they will have more credibility than you with the creditors.

With a fourth method of debt consolidation to help you get out of debt, you pay the debt management company until enough cash is built up in escrow to make final deals with creditors. You are put behind in payments enough that it shows a hardship, and the creditors will then be willing to settle. Debt consolidation helps you get out of debt, so you can start fresh again.

Getting Debt Free Isn’t Easy

Shaun Connell — Sun, 30 Aug 2009 06:17:55 +0000

Getting debt free isn’t easy in today’s world, where prices go up and quantities go down. There are steps you should take in order to become debt free. Taking these steps to becoming debt free will improve your credit rating and eventually enable you to secure that loan for the house or car you have been dreaming of.

Step 1 – Preparing a budget: It is important that you keep track of how much you spend on each expense each month. Do you spend a lot of money on snack food? Do you like to play scratch off lottery tickets? Small expenditures can add up over time so think about how much money you spend on what and consider if each item or expense; is it truly necessary? It is also important to understand what your current bills are in order to set up payment plans on any old bills you may have.

Step 2 – List your debts: Another important aspect of getting out of debt and improving credit is understanding what debts you are obligated to. Getting a credit report and making a list of all the old debts will help you plan your budget. Remember never to plan more monthly payments towards old debts than what you can live with comfortably.

Step 3 – Which of your debts are the most damaging: After establishing a list of your debts analyze them to see if any of them are accumulating any interest or late charges. Start with scheduling payments on any debts that are still building higher balances because of interest rates or late charges in order to control the growth or your debt. If the number of your debtors is large, most creditors are able to work out reasonable payment options as long as you are willing to make an effort.

Step 4 – Use your assets to erase debt: If there is any kind of substantial balance in your savings or if you have items that can be liquidated quickly, such as cash or stock investments, it may be a good idea to use the liquid assets to pay off any of the more expensive debts. Some credit cards and bad credit loans charge more interest than a savings account or many stock investments can earn. This means that over time you will save money by liquidating the assets and erasing the most expensive debts first.

Step 5 – Pay more than the minimum: Credit cards and loans are planned payments established by creditors that can benefit the most from customers paying only the balance due and nothing more. The more you pay above the balance due, the less the total balance will be when calculating the interest. For higher interest debts, it is highly advisable that you make plan your monthly payments to that more of the principle is paid than the interest. This way, in the long term, you will pay much less interest and have more to show for the money you have earned.

Personal Finance Tricks For Getting Out of Debt

Shaun Connell — Sat, 29 Aug 2009 13:09:45 +0000

Are you staring at a pile of debt and see no way out? Maybe you have even tried to use some smart strategies to pay down the debt, but soon found yourself more buried than ever. Never fear, it IS possible to beat down that debt, and all it will really take it dedication on your part, and following a few simple tips. Here are a few tips that anybody, regardless of how far in debt they are, can use to pay down that pile of debt and be free.

Your first smart strategy to eliminate debt is to divide and conquer. That’s right: treat this as if it’s war. Since you are declaring war on your debt, you will seek to eliminate the little guys first. Those little guys are the weakest and easiest to kick out of your life. Which are your smallest debts? Perhaps you have six credit cards, ranging in balance from three hundred up to eight thousand dollars. First you will go after the three hundred dollar debt. Each month, you will continue to pay whatever you have been paying before on each card, but the difference here is that any extra money, even a few dollars, which you’ve been sending off will now go to one place and only one place: the smallest card first. If you are only able to send off a couple of extra dollars each month, send it to the smallest card. Make it your focus , even your singleminded obsession, to pay off this smallest debt. Because this debt is small, relatively speaking, to the others, you will be able to pay it off much more quickly. Paying off debt gives a feeling of real accomplishment, and will help you to stay motivated. Once you’ve paid off the little guys , work your way up the ladder to the larger debts. As long as you stay focused, this will really help you to approach debt reduction in a smart and systematic manner.

The second smart strategy to kick your debt out of your life is control. Yes, unfortunately you are going to have to make a few sacrifices, like getting a debt consolidation loan, and they have to start here. From now on, you have to stop using credit cards. Is it difficult? Yes, in the beginning- but once you have started, you will find it hard to believe you once relied on credit cards so heavily. Cut the cards up, make them completely unavailable to you. When you are paying cash for everything, you will soon realize that your cash has a real value, and it will help you to learn restraint.

The third smart strategy is a simple one, but it will make you appreciate money in a new way. Since you are now using cash to pay for everything, it is time for money games. From now on, whenever you find yourself with a one dollar bill, stash it in a box or jar. You can play this game with ones, fives, or change as well. Let those dollars add up for a few months, and then take them out and count them. You might find there is far more than you’d hoped! Here is where debt reduction can be fun: you can keep half of this money game stash, to do whatever you want with. The other half, you need to apply towards the smallest debt right away. This way, you have both a sense of reward for paying down debt, as well as a feeling of fun since you get some “rainy day” spending money too.

Debt reduction might initially seem like a drag, and this is the reason so many people keep putting it off. Actually, with the help of these easy to follow tips, beating your debt down can be easy, trouble free, and even…a little fun!

Best Ways to Get Out of Debt

Shaun Connell — Fri, 28 Aug 2009 19:39:36 +0000

Unfortunately is seems it is very easy to get into massive amounts of debt, but nearly impossible to get out of it. The best ways to get out of debt take a lot of hard work and determination on your part, but in the end the feeling of freedom that you have will be well worth the effort you make.

It is recommended that you first make a list of exactly how much you owe. As daunting as it may appear on paper, you need to have it listed. Also list your income on a monthly basis so you know what you have to work with.

If necessary, get a second job. Keep the amount of money out of your check for basic needs such as food, shelter, a car payment, (so you can get to that second job), and any other things that you absolutely have to have to survive. This doesn’t include expensive cable and/or cell phones. Try to cut down on every un-necessary item on your list of bills. If you have to seek further employment, try to keep the money you make from the second job to use only for paying off your debts.

After making a list of the debt you owe, choose the items that have the highest interest rates to try to pay off first. Always send in more then just the required amount. It may seem like it takes forever to get the first bill paid off, but when you finally get to scratch it off the list, it will motivate you to keep trying.

If you have a second car that isn’t used often or isn’t really necessary, sell it. Not only will it lower your basic monthly bills like insurance, gas and upkeep, you can use the lump sum you get the it to pay off a whole bill. If you own your home, look into getting a second mortgage.

Quite often you can consolidate al of your bills into one affordable payment by getting a loan on your house. Make sure you speak with a credit counselor first though, to be sure it is the best thing for you to do, and that company you choose to deal with is on the up and up.

One of the best steps you can take to get out of debt is to immediately is also to stop using credit cards. You may wish to keep one that has a low interest rate in case of an emergency, but get rid of the rest of them.
If you absolutely have to, make use of a credit counselor, but be very careful in choosing which you use. Check with the Better Business Bureau before hand.

Unfortunately there are too many shady companies claiming to be there to assist you to get out of debt, but they will only make things worse in the long run. There are two types of credit counseling companies. One states it is for profit with the other being a not for profit. They provide basically the same services, and most charge a fee either way, so it is best to chose wisely if you need to procure this option.

In some instances you can set up a payment plan with your credit card companies that allow you to keep a good credit score, but you won’t be able to use the card once you sign the agreement.

Whichever way you feel is the best way to get out of debt, remember to work hard and be patient. Given time and practice you can relieve yourself of all excess debt.

How to Lower Your Interest Rate

Shaun Connell — Sun, 23 Aug 2009 13:34:41 +0000

Has your credit card debt gotten out control? Do you need to lower your interest rates?

Life just seems easier when you have a credit card or three in your wallet. Or is it? That depends on how you look at it. They do make it easier to get what you want or need now. But later, when your cards are maxed out and your interest rates are skyrocketing, they begin to lose their luster.

Late charges and penalties keep adding to your balance, and it seems as though you’ve been sucked into a black hole with no hopes of escape. And then, out of the blue and for seemingly no reason, your credit card companies raise your interest rates again. The hole gets deeper.

There are steps you can take to lower your interest rates, reduce your monthly payments and get out of debt faster.

Credit card companies have a practice of raising your interest rates when balances on other accounts you have get too high, or when you have made late payments to another creditor. It is called universal default, it is in the fine print of your contract, and it is treacherous. Universal default will not only raise your interest rate, but may affect your minimum payment as well as your credit rating. You need to take action.

Call your credit card company and ask for a lower, more reasonable rate. The worst they can say is no. But, if you never ask, you can be sure they will never offer. As long as you are happy to pay outrageous interest rates, they will be more than happy to take your money. Success may or may not happen with your first attempt. If it doesn’t, keep trying. Call at least once a month, until you get what you are asking for, or can take your business elsewhere. In the meantime, pay all of your bills on time and start reducing your credit card balances.

Store credit cards almost always charge a higher interest rate. If you are carrying a balance on one, transfer it to one of your major credit cards with a lower rate. Avoid the temptation to take a cash advance on a card to pay off balances. Credit card companies often charge higher rates and surcharges on advances.

Start today, and within a few months you should be able to lower most of your interest rates and finally begin to get out of debt.

How to Start a Debt Snowball

Shaun Connell — Sun, 23 Aug 2009 13:26:04 +0000

Debt. Many say it is the way Americans live in this day and age. Some often feel as if they will always be in debt so why try to get out. They think car payments and credit cards are a way of life and that you will always have them.

This could not be further from the truth. Being in debt is allowing creditors to control your finances instead of yourself. Being debt free is freeing and there are ways to be free from the shackles of debt.

A great way to get out of debt is known as a debt snowball. You may be thinking, “Yes, I have heard of the debt snowball, but does that really work?” The answer is yes. By using the debt snowball technique, you can become debt free.

Here is how to start a debt snowball. First, list all of your debt except for your house. List your debt in order from highest amount to lowest amount. Do not take into consideration the interest rates.

It is important to do this in order of high to low. You will also need to create a budget for the month. At the beginning of the month, sit down and write every expense. This is taking into account every money transaction made for the month. If there are birthdays in that month, budget for them. If you know you will eat out more, put it in the budget.

Once you have every dollar accounted for that month, then all of the extra money needs to go on the lowest debt. The main reason for doing your debt snowball by the smallest amount first, is that it becomes addicting. Once you pay off that first debt, you will be unstoppable.

By putting every extra dollar each month on the smallest debt, it will be paid off in no time. Once you have that one paid off, you put all of the money that you were paying to the smallest debt on the next one in line until you are debt free. Wouldn’t it feel great to be able to scream at the top of your lungs that you are free to debt? Free of creditors? Free from monthly payments and interest?

Another good idea while working on your debt snowball is to sell items. Do you really need the china that has been sitting in your cabinet for your entire marriage still in the box? Sell anything and everything you do not use and you will find yourself getting those debts paid off faster. The debt snowball will have nothing on you.

Why Debt Consolidation Loans Make Sense

Shaun Connell — Fri, 21 Aug 2009 21:13:20 +0000

Everyone has money problems from time to time. There is no shame in that. What is a shame is not handling those problems in the best way possible. For many people, a debt consolation loan is the ideal solution. Here’s why.

A debt consolidation loan combines all your current debts into one easy to manage monthly payment to make it easier to get out of debt. Consolidating your debt leaves you with more money in your pocket, since the total of that one payment is usually much less than the combined total of all those individual bills.

As a result, you get control of your life once again, and can actually think about something other than how you are going to manage to meet that credit card payment next week.

Another benefit to debt consolidation loans is that you often end up owing less money over time. This is because there is a good chance you can get a better interest rate on the loan than the rates you carry on the debts you retire by taking out the loan. That difference in interest puts additional money back in your pocket, giving you a little something extra to enjoy now and then, or to go into your savings if you like.

Debt consolidation can also help you avoid destroying your credit rating. If you are close to being unable to keep up with all your debts, slow pay and no pay notes on your credit reports are not far behind. By paying off your debts using the proceeds from a debt consolidation loan, you create excellent references on you credit report, as well as make it easy to stay on top of that single payment.

There is even a chance that taking out a debt consolidation loan can help you avoid the possibility of bankruptcy. Many people accumulate a series of small debts over time, and don’t realize just how much they owe in total. The situation only becomes apparent when they are no longer able to pay all those debts in a timely manner. Debt consolidation helps you step back from the brink of insolvency and bankruptcy, and gives you the chance to get your budget back on track.

Keep in mind that while a debt consolidation loan can do a lot of good things, it’s not a magic bullet. You still need to learn how to budget more effectively, so you won’t end up in the same boat again. Make the most of the second chance that the loan provides, and you won’t be sorry.

The Best Ways to Get Out of Debt

Shaun Connell — Fri, 21 Aug 2009 18:31:26 +0000

The best way to get out of debt is to stop making new debt. Creating new debt while paying off old debt is like digging a hole and trying to fill it at the same time. The first step to not creating more debt is to create a budget. Not a “how I spend my money” budget like everyone tells you to do but a “how I must spend my money” budget like you should do.

See all those old bank statements you have lying around? Throw them away. The money is gone. Let it go. That is the past. Now you’re moving forward and being smart with your money.

The first step to your “musts” budget is finding all your bills for the current month whether you’ve paid them already or not. If you don’t pay your bills bad things happen. So itemize them in a list with the minimum amount that is owed this month ordered by the day of the month they are due.

Split them into two periods: the 1st through the 14th and the 15th through the end of the month. Add up the total bills you owe each period. If you are paying at lot more in one period than the other see if you can adjust when you pay the bills to balance it out more.

Now you know exactly how much you “must” spend each month and when all the money is going to be taken out of your bank account. The second step is to figure out how much you are paid in the two bill periods.

Add up all the income you make from the 1st through the 14th and from the 15th through the end of the month. Subtract the amount you must pay from the amount of money you make in each period. If it turns out you make more than is needed to pay the bills each period you are not broke. You are wasting money.

Now, all you have to do is make it through each day without spending money you don’t need to be spending. Take at least some of the extra money and make extra payments on debts Pretty soon your debts will be paid off and you’ll have even more extra money each month.

All because you stopped creating new debt and maybe even found some bills that you could do without or reduce. Like cell phone contracts and overpriced cable service.

Once you stop adding new debt you can move on and focus on paying off your debt consolidation loan, your credit card debt and work towards getting out of debt completely.