Consolidate Your Debt For Free

You have reached a stage of frustration and are finding it difficult to live under the burden of debt. Why not get out of it through debt consolidation? That is cumbersome and involves dealing with yet another agency. So why not do it yourself?

Yes, you can provided you have a plan and through this, you can put aside much needed money through reduced interest and come out free from debt.

Here are some tips to go about it:

1) Commit to yourself that there will be no further debt and get rid of the cards to start with. No cards mean no indiscriminate expenses and no unnecessary debt.
2) Make a list of all debt in an excel sheet and it should have the following:

a) Name of the lender
b) Current principal liability
c) The minimum payment due
d) The rate of interest
e) Contact numbers
f) Email and website

If you have any credit open, make a mention of that also. It will come in handy.

3) The next step is to commence checking with each of the card companies about their balance transfer offers. Make sure to tell them that you would shift the account if you happen to get a good offer.

4) Make sure that you maintain notes of any offer on the excel sheet and also check for any hidden clauses. Ensure that you verify delayed payment charges and the tenure of the low interest rates.
5) You need to be alert about a popular marketing plan to entice members with a low rate for the transferred balance with a commitment for a minimum amount every billing cycle. Any outstanding on this is charged at a higher rate, which is fine on the face of it but can be costly if you do not pay off your transferred balance. This is because the card company will levy the lower interest rate first on the transferred balance and not on the other one. This will continue till the balance is settled.

Now you need to choose the best offer and transfer all balances to this card. If you fall short, do not hesitate to ask for an increase in the credit limit. If that is also not provided, take the next best offer.

Make a note of when the special offer ends so that you are able to clear your balance transfers. This way you will not have more than 2 cards and will be able to manage your finances far better.

Most finance advisors would be of the opinion that you need to close the non functional accounts, but it is better to keep them for any major exigency that you might face in future. Just have the discipline to not use them. This way your credit rating will not suffer and you have the option of falling back on these accounts. This advice comes with a caveat that if you are unsure of your spending discipline, then you need to close them with immediate effect.

Do not make the mistake of mixing up the credit card debt with real estate collateral. Failure to pay will risk your house getting repossessed.

Follow the above steps and be your own master finance advisor.

Non Profit Debt Consolidation

People who have run up debt are looking at some program that will them solve their problem and debt consolidation offers them some hope. While there are many offers abound in the market, a borrower needs to choose the one for him after some study and typically a non-profit agency should be ideal for him.

Why do I say so?
Other agencies have a vested interest in making their own money out of such programs and what they offer may not always be in your best interests. Non-profit agencies do not have a vested interest and may end up giving you a good deal.
Free Debt Counseling
These agencies offer free advice and they also guide you through the process in a more transparent fashion. Information about the other aspects of the program enables you to plan your finances in future in a better manner and assists you to minimize damage to your credit rating. You cannot opt for any non-profit agency and need to do your due diligence before choosing one that will help you get out of the mess you are in sooner than later.

It is useful to be aware that non-profit services also has some cost and is not totally free. As long as this fee is nominal and affordable, you should not be unduly worried.

You need to insist on a credit counselor who will negotiate with your creditors after understanding your current financial position.
The counselor will send you an agreement. The agreement should ensure that your debt is decreased by about 40% to 75%. The responsibility of the agency is to merge debt, and ensure payment is made by the borrower every month.

The advantage you have as a borrower is that your payment obligation does not increase over time and you can settle the debt sooner than later. The saving you generate from a lower monthly payment can be reinvested into the repayment.
Such agencies help you to achieve the following:

• Methodology to restructure, and set financial objectives
• Plan to lead a better life.
• Save money to get the advantage of better buying power.
• Generate savings to improve quality of life.
• Structure and use information to get out of debt faster.

It is necessary to remember that a non-profit agency will help you achieve your goals only if you are disciplined enough to follow their recommendations and maintain prudent finance management. It is also important to make the repayment on schedule every month without default as it will erode the confidence levels of the creditor and put you in deeper trouble.