How to Consolidate Your Debt

Why You NEED to Get Out of Debt ASAP

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Many people having grown so accustomed to living with debt they don’t consider that they can live any other way. All too often, people think that as long as they’re paying their bills on time, there is no hurry to get out of debt. The flaw is in this logic is that even if you aren’t having financial trouble at the moment; you never know what will happen down the road. Additionally, there are many ways in which debt affects your life that you may not consciously realize.

Throwing Money out The Window

Every time you borrow money and pay it back, the lender charges you interest. In other words, you pay for the privilege of using credit or getting a loan. That means whatever you buy with that money costs you more than it would if you had paid cash. Why give a lender or a credit card company your hard-earned money if you don’t have to?

Credit Cards Lead to Impulsive Spending

It’s a proven fact that people are more prone to make impulse purchases when they are using credit cards. If you have a lot of credit cards find a way to pay them off using the tips we provide you in our Debt Consolidation Guide Here! You will experience much less buyer’s remorse when you are forced to think about whether or not you really have the money to spend.


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Free Up Credit for When You Really Need It

Running up high balances and consistently using your credit cards is bad. There is something to be said for having credit available when you really need it. You should still get rid of most of your credit cards, but keep one or two accounts open for emergency use only. That way if you get hit with an unplanned expense, you can pay for it without tapping your savings.

Ownership is Awesome

Having a brand new car is fun for a little while, but eventually making the car payments gets old. It is a huge advantage to be able to look at your car and know that it is paid off. If you take good care of your vehicle, it will last you a long time and you can enjoy having a nice car without forking over a substantial monthly payment.

Building Wealth

You can never hope to be wealthy, or even just financially comfortable, as long as you owe people money. Debts drag your finances down like lead weights. If you really want to get ahead financially, you have to eliminate debt from your life. Once you do, you’ll be amazed at how much more money you have.

Have a Better Retirement

Believe it or not, life does not end when you retire. The reason why they call them the golden years is because you are supposed to be able to enjoy life without the hassle of going to work each day. If you really want to enjoy your later years, then you need to put as much money as possible away while you are still working. That is hard to do if you’re paying on debts.

Make Your Life Easier

Even if you are successfully making ends meet, juggling multiple payments is time consuming and stressful. Think about how many hours you spend each month balancing your budget. Wouldn’t it be easier if you just simply had fewer monthly bills to pay? Once you pay off your debts, you’ll cut down the number of bills you have to pay and simplify managing your expenses.

Have More Time for Yourself

Not only is balancing your budget easier when you are debt-free, but it is less time consuming. Once you reduce the number of monthly bills you are paying, you will have more time to devote to other things. You may want to spend more time with your significant other, or pursue a hobby, or do more with your kids. Paying bills shouldn’t take up hours of your precious time.

Improve Your Relationship

Admittedly, paying off debt will not necessarily add more romance to your life. The number one thing most couples argue about is money. You can remove that extra stress factor from your relationship by paying off your debts and putting yourselves in better financial shape. Once you do, you’ll realize how much added stress debt was placing on your relationship.

Less Risk

Leaving yourself without a backup fund is like driving a car without insurance. If you experience a costly emergency, you could wind up with your finances totaled. Instead of giving your money away to creditors, stash it away in a savings account or invest it in liquid assets. You are better off to have money you don’t “need” than to not have money when you really need it.

Give Yourself a Pay Raise

Add up the amount of money you pay on your debts every month. Whatever that number is, it is the equivalent of having it deducted directly from your paycheck. If you didn’t have those debts, it would be the equivalent of getting a huge pay raise. Get out of debt and you’ll find that you actually have more money than you think you do.

Improve Your Credit Score – Using Part 2 Of The Guide

Nowadays, your credit history counts for more than just borrowing money. Your credit score can also affect your insurance costs and your ability to get a job. You might very well get turned down for your “dream job” if you have bad credit. Eliminating your debts will boost your credit score so that you can get better insurance rates and not have to sweat employer credit checks.

If you really think about it, you could probably add another dozen reasons to this list at least. Debt is something that we get so used to that we don’t always realize how much of a burden it really is. You may not be able to get out of debt overnight, but you will also never accomplish it if you don’t begin to try. It takes time and some short-term sacrifices, but living without debt will improve your life tremendously.

DEBT CONSOLIDATION GUIDE

The How And Why Of Debt Consolidation

Are you struggling to pay off your multiple debts?  Have personal loans and credit card bills added up to the point that you don’t know where to turn?  There is help in the form of debt consolidation.  There is no need to be embarrassed about asking for debt help.  Sometimes debt is just a part of life and difficult to avoid.  Getting out of debt may seem impossible if you have become overwhelmed with payments.  Prove that financial freedom can be achieved by consolidating your debts into one convenient personal loan.  Through proper debt management and budgeting with a debt consolidation loan, you can experience the amazing feeling of being debt free.

What is Debt Consolidation?

Debt consolidation loans are designed to replace multiple loans.  For example, if you have multiple debts in the form of credit card payments, personal loans, or other unsecured debts, a debt consolidation loan will combine all of these debts into one convenient personal loan.  Generally, this debt consolidation loan can be attained at a reduced interest rate.  By combining your debts into one convenient loan, you will eliminate multiple loan payments, allowing you to pay off your debts with one monthly payment while minimizing your monthly debt expenses.

Types of Debt Consolidation Loans

There are two types of debt consolidation loans available to those seeking a way out of debt—secured and unsecured.  A simple personal loan is an unsecured debt consolidation loan that will allow you to pay off all of your debts in one convenient monthly payment at a lower rate.  However, many who are seeking debt relief will not qualify for an unsecured loan.  These individuals may still be able to obtain a debt consolidation loan in the form of a secured loan.  With a secured loan, collateral must be provided in the form of assets.  While these assets can be in the form of vehicles, property, or bank accounts, the most popular form of secured loan is in the form of a home equity line of credit.  While you are likely to receive a larger loan amount and much lower rates and interest levels with a secured loan, be aware that you are placing your home or other assets at risk if you are unable to make the payments.  When applying for a home equity or other secured loan, be certain that you completely understand the terms of the debt consolidation loan.  

How Does a Debt Consolidation Loan Work?

If you have multiple loans or credit cards with outstanding balances that must be paid off each month, you are likely paying more in repayments than you would with a single debt consolidation loan.  By combining all of your various debts into one convenient personal loan over a longer term, the actual amount you will be required to repay may be drastically reduced, allowing you to more effectively manage your finances and get your debts paid off in a timely manner without letting them take over your life.

Repayments

Debt consolidation loans can be set up so that you can make payments on the loan either weekly, fortnightly, or on a monthly basis.  You can conveniently set up the length of the loan and repayment schedule to meet your specific financial needs.  Typically, a debt consolidation loan can be set up for lengths between 1 and 7 years.  The length often depends primarily upon the purpose of the loan and the amount.

Rates

Debt consolidation loans are either at a variable or fixed rate.  This simply refers to the rate of repayment on your personal loan.  A variable rate debt consolidation loan will allow you to make additional unscheduled payments on the loan with no fee.  A fixed rate consolidation rate, on the other hand, means that your payments are on a fixed time schedule and variable payments cannot be made. 

Be Informed

Before you commit to a debt consolidation loan plan, make certain that you completely understand the terms and are fully informed about the loan.  The solution reached through the debt management plan you select should be a permanent solution rather than a short term fix that will only bring you right back to where you currently are in the end.  Make sure that the terms of the personal loan do not increase your monthly payments, but reduce them to a manageable level.  Check thoroughly to be certain that there are no hidden fees or extra costs in the plan.  You should also be fully aware of any consequences resulting in late payments or non-payments of the debt consolidation loan.

Who Doesn’t Qualify for a Debt Consolidation Loan?

Unfortunately, a large number of individuals who find themselves in need of debt help are ineligible for a debt consolidation loan because they have a bad credit rating.  These people often have fallen behind in their payments and are struggling to pay off their monthly expenses and personal loans.  These individuals may still be able to reach a reasonable solution to paying off their debts by contacting a debt agreement administrator who may be able to work out an agreement with various creditors.  This is referred to as a debt agreement and is not the same as debt consolidation. 

Gina Wilson

Another post from Gina Wilson – Credit & Loans Specialist Blogger.