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.

Debt Consolidation Help

While a loan taken through the debt consolidation route is very useful, it is necessary to be aware of the pros and cons of such an arrangement before venturing into it.

The debt consolidation arrangement works by merging multiple loans into one and involves repayment over a longer tenure. Consequently, the monthly payment is lower and places some cash in the hand of the borrower.

An example is when you have 2 loans, where the monthly payments are $50 each. You are therefore paying $100 per month. Through debt consolidation, the new creditor will take on the loans and give you one bill for about $50, which saves you $50 per month. In this arrangement, you have reduced your monthly payment to pay the amount outstanding over a longer period. If you had continued paying the individual outstanding at the current monthly payment, you would have settled the outstanding sooner.

Debt consolidation offers other options like student loans where multiple student debt can get combined into one and mitigate the hardship faced by the students in making high monthly payments. Inflation and costlier academics compel students to take multiple loans and it can become very difficult for them to repay. Debt consolidation, by its definition makes it easier for the students to repay by reducing the ticket size on the monthly commitments.

Many card members face a similar situation with the accumulation of debt on multiple card accounts. They can also opt for a consolidation debt where the monthly payment is again reduced and the creditor is a single entity. By utilizing the saving resulting out of this into repayment, the member can decrease the total debt against his name and hope to clear the entire debt sooner than later. Care must be taken by the member that he does not continue splurging on his card while this arrangement is in force. It will only make the situation worse.

The above benefits seem good but one has to be aware of the negative aspects of debt consolidation as well. They can send wrong signals to the lenders about the financial strength of the borrower. Other lenders may want strong security collateral before they advance any loan. Of course, this demand depends upon the overall credit rating as well as the loan amount sought by the borrower.

It is important for prospective borrowers to do some study on the various programs available in the market and the benefits of each before signing up. It is equally imperative to be aware of the hidden clauses to avoid getting into a worse soup.

Finally, it is important to recognize that any debt put off only provides temporary relief and the amount has to be settled ultimately.

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.

Online Debt Consolidation

A lot of people are fighting a daily battle to make ends meet. Some of them are under the mistaken belief that they are good at finance management and will be able to comfortably meet the growing expenditure. They do not realize that very often earning has not kept pace with the ever increasing expenses till it is too late to do much about it. Increasing and easy disposal incomes, easy access to cheap money through low interest rates, global consumerism and irresponsible usage of plastic money due to the fact that one can use the credit card for almost everything has led to debt getting piled up. They find it difficult to settle bills and this puts them under tremendous stress. A possible solution could be debt consolidation which may provide relief from all the anxiety and harsh calls from the creditors.

This option enables the facility to merge several payments into one entity at an interest rate far lower which results in the monthly repayment getting slashed. Since only a single payment is to be made on a monthly basis, the finance management becomes easy and with only one creditor to manage, one can be liberated from the irritating phone calls and mails,

Those not adept at handling their money prudently, fall into the trap of high debt caused mainly due to inability to service current debt, delayed payment levies. They need to become aware that they have a problem at hand at the earliest. Debt compounds an existing problem when you borrow and you are unable to repay it on time. This leads to the interest amount piling up in tandem with the principal. Faced with such a dilemma, it is better to consult a finance expert. This expert can guide one to initiate a debt management plan at the earliest which can result in savings as well as improvement in the credit rating. A weak credit rating could severely impact your chances of borrowing in future.

A debt consolidation program has two components:

a) Methodology to get out of debt.
b) Encouragement through the ease of repaying to one creditor.

Since this single monthly repayment to one creditor is much lesser than the multiple payments one would have made to the original creditors, the money saved enables one to make a greater contribution to the principal of the original debt rather than continuing to pay interest. A debt consolidation plan therefore assists one to get freedom from debt sooner.

Debt consolidation home loans enables one to offer one’s house as strong collateral and get higher loan amounts as well as lower rate of interest since the collateral is a secured one. The rates are higher on an unsecured one where there is no collateral.