Debt consolidation is a simplified way of combining all
your individual debts into one single loan. Usually if you are home
owner, you could apply for a home equity line of credit. You probably
heard many advertisements on the radio, or seen them on televison.
This is an excellent option for those with fair to good credit. An
excellent way to manage your monthly household budget by taking all
your high interest credit card debt, loans, and even household repairs
and making one small payment over many years. Consumer needs to
understand , that sometimes you may pay out more in the long run, than
just paying them off simply because the interest accumulates over the
longer period of time.
You are essentialy borrowing from Peter
to pay Paul. You have to choose the lessor of the two evils when it
comes to your household finances, and preserving your over all credit
rating.
There are other programs avialable for the non
homeowner; these options unfortunately are not the cheapest ways to
go. If you have good credit, you can obtain a bank signature loan to
consolidate higher interest loans such as credit card debt. If you
have three credit cards with a total of $9,000 worth of debt on them,
with the average interest rate of the three averaging about 18-21% ,
then you would try to obtain a loan for 9-14 % to save on the interest
alone. Please refer to the loan caculator to see how much you would
actually save.
You will be amazed on the amount of money you
can actually save, just by reducing your interest rate by even 1-2% .
That puts more money towards the principal rather than the interest.
Another
option, is refinancing your car. If you have a late model vehical that
you own free and clear, you could refinance the car in order to
consolidate your debt. Be very careful because if you can not afford
the payments that you arrange, you could lose your car. Be sure to do
a budget before making any new agreement to settle debt, by taking on a
new one. Most people look at the here and now, when instead they
should be looking toward the future. We are currently expieriencing
economic termoil, and everyone needs to prepare for changes in life
style, especially in the case of job loss.
