Let us create a 3D eBook for you!
Let us create a 3d Digital eBook for you! DigyCat.com

Eight Ways to Consolidate Debt


Next to winning the lottery, a debt consolidation loan is a debtor's dream. With one monthly payment and a fixed monthly payment schedule, you can actually see an end to those monthly payments.

In reality, consolidating bills isn't always easy. If you have a lot of debt, it can be hard to find a consolidation loan at a lower interest rate. And if you're not careful, you can end up deeper in debt than when you started.

Your goal in consolidating your debt should be to lower your overall costs. To accomplish this there are two things to keep in mind:

1. Get the lowest interest rate possible

2. Have a plan to pay off your debts in 3 - 5 years.

Here are some of the best ways to consolidate:

Using Credit Cards

The good news about this method is that with a good credit rating, you may get a much lower rate than other forms of consolidation loans. And since credit card issuers don't require collateral, you aren't "risking the farm."

Call your current issuer to ask what interest rates they will offer you if you transfer balances from other cards over to theirs. Go for a fixed rate if you can get it, and ask them to waive any transfer fees. If you can't negotiate a low rate with your current issuer, try shopping for a new card at a site such as CardRatings.com. But be careful! Too many applications for credit in a short period of time can hurt your credit rating.

Once you do consolidate this way, be sure to set up an optimal payment plan so you can be debt-free in 3 - 5 years.

Home Equity Loans

With a home equity loan, you borrow against the value of you home, minus any other mortgages. The two major kinds are:

1. A Home Equity Loan - a fixed amount of money for a fixed period of time (sometimes at a fixed rate) and

2. A "Home Equity Line of Credit" where you borrow up to a pre-approved credit limit (interest rates usually variable) and can borrow again if you still have money available.

These loans can offer attractive rates, low payments, and the interest is usually tax-deductible if you itemize.

Many issuers offer no or low closing costs for these loans. Interest rates are often variable, however, and there's always the risk that you can lose your home if you can't pay.

Cash Out Refinance

Refinancing your home and taking out money to pay off bills (called "cash-out refinance") is yet another way to tap the equity in your home. If you can refinance at a substantially lower interest rate, you'll eliminate the high interest costs of the debts you pay off, and you could even come out with a lower payment than you have right now since rates are so low.

One option to consider: an interest-only loan. By lowering your monthly payment, you can free up money to use toward paying down other high-rate debt or building a retirement fund.

Make sure you understand the total cost of refinancing. Take any money you've freed up by paying off other bills and use that to create an emergency savings fund.

Traditional Debt Consolidation Loans

A debt consolidation loan is an unsecured personal loan, and the only collateral you are offering for the lender's security is you. Because lenders consider them risky loans, they're usually more expensive and not always easy to get if you have a lot of debt.

If the interest rate is too high to make it worth it and the repayment term is ten or fifteen years, you should probably consider another method of consolidation. However, if the term and interest rate are right, this can be a great way to actually save money in the end. (Check Bankrate.com for current averages). Remember, to calculate the total cost of the loan from start to pay-off.

Credit Counseling

Credit counseling agencies may help you get out of debt, though they don't actually consolidate your debt.

Instead, payment plans (usually with lower interest and fees) will be worked out for all of your eligible debts. You'll make one monthly payment to the counseling agency, which will pay all your creditors.

Participating in a credit counseling program generally won't hurt your credit rating, and if you stick to the plan you can be out of debt in three to six years. But be careful which agency you work with. If the counseling agency pays your bills late, you'll pay the price since you're still responsible to the lender. It happens.

Debt Settlement

Debt settlement is another option that's become increasingly popular with consumers who have a lot of debt and can't, or won't, file bankruptcy. You stop paying your bills and instead make a regular monthly payment to the settlement company. Your creditors contact them, and not you, about your overdue bills. As your accounts fall further behind, the negotiation company will settle your balances - usually for 50% of the balance or less (including fees) depending on the debt. Most people can be out of debt in less than two years or less using these programs.

It's not perfect. Your credit rating will be hurt in the short run and you must be certain you're dealing with a reputable company or the money you pay each month could disappear. Still, for consumers who can't shoulder the burden of debt they have now, it can be a very good option.

Retirement Loans

If you have a 401(k), 403(b) plan or certain types of pension plans, you can borrow against your nest egg. (You can't borrow against your IRA.) It's easy, with no income qualifications or credit check.

The key here is to borrow against your retirement account, rather than withdraw from it early so that you don't end up paying taxes and a 10% penalty. Also, if you leave or lose your job, you may have to pay your loan back immediately or pay taxes and penalties for an early withdrawal.

These loans typically offer low interest rates, and interest is paid to you, since you are the lender. While tapping your next egg like this can short-change your retirement, so can costly debt payments. If you are in your 20's and 30's,you obviously have more time to rebuild a retirement nest egg, but even if you're in your 40's or 50's, you will want to weigh the cost of paying the high interest of the debts over time, versus borrowing from your retirement account. The return you get from paying off high-rate debts is guaranteed - while the stock market isn't.

Rapid Repayment

There is a mathematically optimal way to pay your debts. Choose a fixed level monthly payment, and commit to it each month. Pay as much as you can on the highest rate debt first, while payment the minimums on the rest.

I almost always suggest consumers with debt start by creating one of these plans. Many people who do so find they don't even need to consolidate to get out of debt in the next few years. They just need a plan and they can do it on their own.

Overview

The biggest mistakes people make when it comes to consolidation are:

A. Not having a plan for paying the debt off after they've consolidated, and

B. Procrastination. Waiting for the "perfect" solution to come along almost always means you'll end up deeper in debt. Choose your approach, and start getting out of debt today!

For more information on dealing with debt, visit www.stopdebtcollectorscold.com.

Gerri Detweiler is considered one of the country's top credit experts. She has been interviewed in thousands of radio, television and print news stories including USA Today, The Wall Street Journal, The New York Times, Dateline NBC and many others. She has testified before Congress several times and worked on reform of the national credit reporting laws.


MORE RESOURCES:

Debt Releif - Google News

This RSS feed URL is deprecated

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

Freedom Debt Relief Offers 5 Tips to Help Consumers Avoid Becoming Victims of Identity Theft - PR Newswire (press release)


Freedom Debt Relief Offers 5 Tips to Help Consumers Avoid Becoming Victims of Identity Theft
PR Newswire (press release)
SAN MATEO, Calif., Nov. 21, 2017 /PRNewswire/ -- As travel and online shopping ramp up during the holiday season, the risk of identity theft grows as well – and these common crimes can result in increased cost of debt for people who do not catch the ...

and more »

Browne calls for Paris Club debt relief - Antigua Observer


Courthouse News Service

Browne calls for Paris Club debt relief
Antigua Observer
Yesterday, Prime Minister Gaston Browne seized an opportunity to call on the Paris Club group of lenders to grant his country some breathing space on its debts, as the nation looks to recover from the devastation wreaked by Hurricane Irma in September.
Calling Conditions Primitive, Barbuda PM Vies for Hurricane Relief Courthouse News Service

all 8 news articles »

FSB requests all documents on Yeltsin Center's $10m-debt relief - https://en.crimerussia.com/


https://en.crimerussia.com/

FSB requests all documents on Yeltsin Center's $10m-debt relief
https://en.crimerussia.com/
The Office of the Federal Security Service in Sverdlovsk region requested for all materials on the transaction upon which the government of the Sverdlovsk region will write off interest on the debt of Yeltsin Center in the amount of 598 million rubles ...

Puerto Rican coalition calls for full recovery funding and debt relief - Florida Politics (blog)


Florida Politics (blog)

Puerto Rican coalition calls for full recovery funding and debt relief
Florida Politics (blog)
A national coalition of Puerto Rican groups with heavy representation in Central Florida urged in Orlando Monday for Congress to offer full relief funding for the hurricane-ravaged island and for Florida and federal relief for evacuee housing in the ...

and more »

Getting Help with Credit Card Debt: Freedom Debt Relief Suggests 7 ... - Markets Insider


Getting Help with Credit Card Debt: Freedom Debt Relief Suggests 7 ...
Markets Insider
SAN MATEO, Calif., Nov. 20, 2017 /PRNewswire/ -- For the many Americans who face unmanageable credit card debt, it's time to get their financial lives in order, ...

and more »

Feds sue nation's largest debt-relief provider - Jackson Clarion Ledger


Jackson Clarion Ledger

Feds sue nation's largest debt-relief provider
Jackson Clarion Ledger
The Consumer Financial Protection Bureau has sued the nation's largest provider of debt-settlement services, alleging that Freedom Debt Relief deceived and misled consumers about its services and fees. The agency announced the lawsuit Wednesday in a ...

and more »

China makes no offer of debt relief for Venezuela - ABC News


Venezuelanalysis.com

China makes no offer of debt relief for Venezuela
ABC News
China on Thursday made no offer of debt relief to Venezuela, but said it was confident the country can deal with the problem. The statement from the foreign ministry came a day after Russia and Venezuela signed a deal in Moscow that envisages Venezuela ...
Venezuela, Russia Agree to Restructure Debt as China Voices Confidence in Caracas Venezuelanalysis.com
Putin extends lifeline to cash-strapped Venezuela CNNMoney
Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount OilPrice.com
RT
all 137 news articles »

Russia Offers Venezuela Debt Relief - Wall Street Journal


Wall Street Journal

Russia Offers Venezuela Debt Relief
Wall Street Journal
MOSCOW—Russia threw a lifeline to Venezuela on Wednesday, restructuring the more than $3 billion it is owed by its economically and politically troubled South American ally. The Russian Finance Ministry said the debt of $3.15 billion would now be ...

Freedom Debt Relief: CFPB “fundamentally misunderstands” debt settlement process - HousingWire


HousingWire

Freedom Debt Relief: CFPB “fundamentally misunderstands” debt settlement process
HousingWire
Last week, the Consumer Financial Protection Bureau sued Freedom Debt Relief, the nation's largest debt settlement services provider, claiming that the company repeatedly lied to its customers about the company's ability to negotiate debt settlements.
Consumer board accuses Freedom Debt Relief of alleged deception ... Legal News Line

all 7 news articles »

LargeFriends.com - the best dating site for plus-sized singles!
SuccessfulMatchCentral.com - the best dating site for plus-sized singles!

PreLaunchX

PrimeNews Domain Is For Sale - $5,000 For Enquiries eMail Us

© www.PrimeNews.biz - 2012

home | site map | links