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Is Debt Consolidation Right For You?

By Edited Nov 17, 2015 0 0


free from debt

Identifying the Problem of Debt

For those who have ever been in debt, understand how difficult it can be to come out of it can become overwhelming.  For People with a lot of loans from various banks or firms, it can be overwhelming when they  have to keep track of all of them.  Different due dates, rates of interest and other things can confuse an individual very easily. These people who are attempting to get rid of this problem are not sure how they are going to properly discharge their debt.  Debt consolidation is a process of removing debt by taking out only one loan to pay off multiple others.  It does not put an individual farther in to debt, but instead rids of several loans, combining all the debts in to one loan. It is generally ideal for those with a lot of credit card debt because it can assist to reduce the interest rates.

Debt consolidation can contain a variety of benefits for an individual who is suffering from many outstanding debts. It puts all the debt into one place to make it easier to keep track of. Consolidation also changes different interest rates into one standard rate, making it easier to follow. Payments are also made easy because there is only payment rather than number of deadlines from various places. This process can reduce the monthly payments, making it easier to get out of it. People like to get rid of their debt quickly when they look for debt consolidation. The hard part of debt consolidation can differ quite a bit based on the amount of money an individual owes and how many companies they owe the money to.  An individual can consolidate the debts on their own through applying for a loan and paying off by using that money. But plenty of people look to a debt consolidation firm or attorney to assist them to get out of it. These organizations give best services for the people in debt from offering advice and specialized knowledge in assisting the customers to get loans. Other important services they provide include convenient methods to track the amount by free financial counseling, new technologies and payment plans.

Debt consolidation is not a right choice for everyone, but it is one of the choices for the people who are suffering financially to pay their bills or have numerous loans to keep track of.  Those who have a major amount of debt on credit cards may consolidate the debt to decrease the interest rates and to make removing the debt easily. Others must look consolidation include when they miss many payments or make late payments.  Some people use one credit card to pay off another and this can get them into trouble before they know it.  These people should consider debt consolidation instead of constantly taking out credit cards to pay off other cards.  People who need to lower the interest rates and payments from various many loans can also look to credit consolidation loans.

debt consolidation

Debt Consolidations versus Other Solutions
Debt consolidation is a wonderful substitute to bankruptcy and can be the debt removal solution which lot of people are considering for. Consolidation does not cover all kinds of loan or debt.  It usually handles the unsecured debts like private loan, utility bill or credit card bill. Secured debt like mortgage and auto loans usually cannot be consolidated by this method. The debtor should have a consistent income to be eligible for consolidation. Assets such as home are not required even though they can assist to negotiate terms with the lending firms. The debts which are owed when the loan is given are paid off fully after the loan is approved.

The lending companies may not be aware that a person has contacted for debt consolidation purposes. It shows that there will be no impact on the credit record of the person. The credit can even go up because there is less loan numbers on the book.  Your credit score can be safeguarded in this process through making payments on monthly in the right amount and by the due dates the consolidation loan has set up for you. A lot of people who look for debt consolidation have to go for some kind of credit counseling or financial counseling.  This is to provide information to the person so they can stay out of debt.  The situation that got the person in the trouble in the first place should be addressed and a plan for that individual should be established and maintained.  Individuals should learn how to plan their money properly to prevent the same situation in the future. The counseling services can offer tools which are beneficial moving forward when other kinds of loans become necessary.

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Dave Ramsey’s Debt Snowball

A person can take care of the consolidation themselves using a technique called the Snowball effect touted by Dave Ramsey.  In this process the person will list their debts from lowest to highest excluding their home payment at first.  The home will be paid off at a later time.  The debts should be listed only in the amounts of money owed and not including interest rates or points.  The person will not pay extra on any bill except the one first on the list.  All extra money the person can find or earn should go on that bill.  When that first bill is paid off, all the money that was being paid on the first bill should go toward paying the second bill including the minimal amount already being paid on that second bill.  This should continue down the list until all bills are paid off.  Please read more about Dave Ramsey’s Debt Snowball because I have simplified it here.  I used this technique and paid off about $14,000 in debt in almost two years.  I admit I did not follow if perfectly, but I was rewarded with extra money at the end of the time. 

I sincerely hope you can use the information of debt consolidation and/or the Debt Snowball to get yourself out of debt.  You will find you can be happier when you do so.  It is not only because you have more money, but you will have less stress when you do not have to worry about the debts that you have acquired.  This will make it easier for you to lead the Level 10 Life.  Make today and everyday a great day. 

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