Debt Consolidation Company:Qualities To Compare

ID-100305140When you decide that using a debt consolidation company may be your best route out of debt, you’ll need to do some research to be sure that you choose the best company for your needs.

There are a variety of qualities to compare, ranging from the industry reputation of the companies you are considering to the specific characteristics of the consolidation program to the rate and fees charged for services. Careful consideration will help you to avoid potential pitfalls and to move towards achieving your financial goals.

Know Your Company

This is one of the most important factors of choosing your debt consolidation company. This is an industry that has experienced exponential growth. Furthermore, it services people who are often vulnerable, due to a lack of in-depth financial knowledge and experience. Thus, there are a lot of predators among those that are truly dedicated to helping you find your way out of debt.

There are debt consolidation companies that are run for profit and those that are non-profit. It is important to note that just because a debt consolidation company claims non-profit status does not make it trustworthy. In fact, some of these companies request higher fees than those run for profit. You’ll have to research any company you consider.

The Better Business Bureau is a good place to start. However, predatory companies often change names quickly and try to stay under the radar. Thus, a good rating via the Better Business Bureau is not always a sure predictor. Use the Internet to run a search on the company name and the individuals heading the company.

Understand Services Offered

The most obvious qualities to compare concerning the services offered by various debt consolidation companies are fees, rates and terms. There are other important qualities to compare as well.

You’ll want to compare the amount of time each company is prepared to spend with you working out a plan to fit your needs. The best companies are willing to spend time preparing an individualized plan for you that not only is geared towards helping you out of your current financial situation, but also towards helping you to develop the money management skills to avoid being in the situation again. Those that just hurry you through – promising fast and easy solutions, just sign here – are most likely just interested in adding another set of fees to their profit margin.

In order to compare, you’ll need a clear understanding of how the offered arrangements will work, including a projected date at which you will have everything paid in full. You’ll want to make sure that the debt consolidation company keeps meticulous records of negotiation with and payments to creditors, and that you will have easy access to necessary documents for your records.

When it comes time to choose a debt consolidation company, making a list of qualities to compare can help you to choose a company that can help you to bring you financial life under control. Time spent in asking questions and doing research will go a long way towards protecting you from predatory companies and let the company you do choose know that you are serious about your money and your goals.

 

Debt Consolidation Is A Way To Debt Freedom

ID-10052748Many of us have noticed the way in which debt can pile up.

Some people who are improperly informed about their finances tend to spend more than their actual capacity.

This can become a problem with credit cards; since they let you spend away up to your limit.

A lot of people tend to use the credit cards in the same way as one would use free money.

When the bills come, and the income just cannot keep up with the repayment dues and other obligations, the person has the choice of not paying the dues, consequently incurring penalties which may add up and leave him in deeper debt.

But, by choosing to avail of debt consolidation, he can ease himself out of debt.

Debt consolidation is the method of taking on another loan to pay off other loans.

In brief, you are securing one debt to pay off others. While this may sound absurd, it does make sense when you learn its mechanics.

The transfer of the debt may be done from several unsecured loans into another unsecured loan, but most of the time it is done through a secured loan which is put up against assets which serve as collateral, usually a house.

Debt consolidation could be applied for because of a few main reasons.

The aim may be to get a lower or fixed rate of interest or to make the task of paying off multiple loans much more manageable.

Debt consolidation programs are often resorted to by people who  are desperate to improve their credit ratings somehow.

This could be the final attempt before filing for bankruptcy. Debt consolidation companies sometimes discount the amount of the loan, and then buy this loan at a marked down  balance.

In this regard, the debtor may easily search for debt consolidators who may pass along some of the savings from the debt.

At the same time, if the debtor is unable to avoid bankruptcy, there will be no way in which he can deal with the debts that pile up.

When it comes to credit card debts,  debt consolidation is one of the best ways to go.

Credit cards  carry  significant penalties and a relatively larger interest rate than most unsecured debts.

Having several cards, each with its own set of terms for servicing can result in higher than expected debt with longer payoff times.

People who are choosing debt consolidation can secure the loans under the security of  assets such as real estate.

This results in a lower rate than the previous debts, and the total interest and cash flow paid to the consolidated debt is considerably lower.

Thus, the loan tends to get paid off sooner thanks to the lower interest charges.

Companies often charge high fees, usually the legal maximum, for debt consolidation services because of the advantages  of using this option to manage debts.

Debt consolidation not only offers consumers lower interest rates by requiring one payment at a fixed rate for all debts, but also eliminating debt in a shorter time frame.

The debtor must understand that debt consolidation is a casualty controlling maneuver that requires discipline.

If the debtor is a chronic overspender, this will only be a temporary solution.

It is therefore necessary for the individual to avail him/herself of credit or debt counseling services to prevent a relapse or recurring situation.

Becoming and remaining debt free requires a new outlook on spending in relationship to earnings.

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

17 Amazing Steps To Debt Freedom

Debt Freedom Debt freedom can be experienced by you,follow these simple steps and you will be debt free. Many of us live with debt in our lives. Whether it is paying off a vehicle, a mortgage, University fees or credit card bills, most likely all of us owe debt in one way or another.

It was Balki Bartokomous who said ‘I am in debt. I am a true American’. However, debt can easily spiral out of control and become crippling.

When you are in a pit of debt and spending, it can be hard to see any way out. Yet, you are not alone. There are many people experiencing the same situation.

Follow these 17 baby steps to debt freedom, and like many others individuals before, you will find yourself free of your debts.

1. Assess your debt in  order to experience a life of debt freedom

To begin with, you need to look at the types of debt you have. There are two types of debt- good debt, and bad debt.

Good debt includes mortgages and student loans, as either your home or your services have more value as times goes on. Bad debt is debt that has a high interest and little to no value- such as car repayments and credit card debt.

2. Talk to your creditors.

Many people who are in debt will be too afraid to speak to their creditors. However, if you want debt consolidation then your creditors can often help. See if they can offer you a lower interest rate or a settlement fee- a fee at a lesser rate if you pay it all in one go.

3. Assess your steps to financial freedom.

You have two options here. The first, is to pay off the debt with the highest interest rate first. Pay all your other debts with a minimum repayment, except for this.

Once this highest interest rate debt has been consolidated, you will have less repayments each month and it will be easier to pay off the rest. The other option is to do the opposite- pay off the smallest loan first.

This is Dave Ramsey’s steps to debt free living option. Ramsey says: ‘The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20% head knowledge and 80% behavior.

You need some quick wins in order to stay pumped enough to get out of debt completely. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.’

4. Choose your payment method.

The first option relates to credit card debt. Take out another credit card with a lower interest rate, ideally one with the first year at 0% interest, and transfer the balance of the higher card to the lower. You will pay less interest and pay the debt off more quickly.

5. Take out a loan.

If you can, take out a personal loan from the bank. The interest rate will be lower than credit card debt, so use this loan to pay off your other debts more quickly and save money. Never use an online personal or payday loan- the fees are extortionate.

6. Use any savings you have to pay off your debt.

This can be risky in the long term, as your circumstances regarding employment or health may change, however in the short term it will bring you to debt free living.

7. Set yourself some goals.

Henry Shaw says “Debt is like any other trap, easy enough to get into, but hard enough to get out of.” this does not have to be true. Use baby steps to become debt free and it will become easier. One of the baby steps is to use goals.

Set goals of paying off a loan in a certain time frame, another debt in another time frame, and divide that amount of time by the amount of months so you know how much you should be paying off each month.

8. Assess your everyday spending in  order to experience a life of debt freedom

Gather all of your monthly financial information- bills, rent, transport, food shopping, non-necessities. Be true to yourself- do not leave anything out- make sure that you acknowledge every penny that you spend.

9. Create a spreadsheet in order to experience a life of debt freedom

On your computer, use Excel to create a spreadsheet of your spending. Use one column for your fixed monthly expenses- these are things you have to pay, for example your utility bills, your rent or mortgage, and the amount you want to pay back on your debt.

Use the other column for your monthly earnings. Now, minus the tax, insurance, anything else that comes out of your earnings. This will give you an accurate number of how much you earn each month.

10. Create a budget in  order to experience a life of debt freedom

Take the amount of money you earn each month, and minus the amount of money you spend on your monthly expenses, including your debt repayment. What you will be left with is the amount that you can spend on ‘other’, such as entertainment, food, clothing.

Look back at the financial information you gathered earlier and see how much you usually spend on these things,and compareDebt Freedom to how much you now have to spend.

Keep using the spreadsheet. Write down everything that you spend in here, make it a part of your life.

If you are finding it unrealistic to live on this budget, then adjust the amount that you want to pay back of your debt.

11. Make sure that you stick to your budget.

To make sure that you stick to your budget, allocate finances for each category- entertainment, food, etc. Put the money for each expense in their own envelopes.

This is a great way to keep track of how much you have spent and how much you have left to spend. Take Andrew Jackson’s advice: “Live within your means, never be in debt, and by husbanding your money you can always lay it out well.”

12. Make debt repayment plan and budget 

With your debt repayment plan and budget in mind, make small adjustments to your everyday life. Take these baby steps to a life of debt freedom.

Start walking wherever you can to save money on gas. If you do have to drive, then combine your errands into one trip. If you usually drive yourself or children to extracurricular activities, see if you can carpool.

13. Become a thrifty spender.

It is easy to spend more than we have when buying household items and food. You need to be conscious of how much you are spending. Become a coupon cutter and a voucher saver- every penny will help.

Take a shopping list with you so that you do not throw in items you do not need. Take the budgeted amount with you and take a calculator or your phone, adding up the items as you go along to make sure you do not overspend. Go for the basics- buy the home brand version of everything.

14. Even better- do all of your shopping online.

Use the internet to purchase your weekly groceries. This way, you can compare the prices of all of the goods, look at how much you are spending and take advantage of all the deals.

15. Sell off what you do not need.

There are so many ways that you can sell your unwanted and unnecessary items. You can use apps such as Depop to sell old clothes, and sites such as eBay and Gumtree to sell off clothes, furniture, DVDs- anything.

Get your items into the best condition possible and use excellent wording to really sell your items. Be brutal- don’t hold on to anything that you do not need or use.

16. Change the way that you spend money every day in order to experience a life of debt freedom

The best way to be spending money- to use cash. Dave Ramsey says: ‘Debt is dumb. Cash is king’ and he is right. It is easier to keep track of your spending as you have the money right in front of you, you cannot borrow from what you do not physically have.

Of course, there are some things that you cannot pay for with cash, however use cash for all of your daily expenses. Definitely do not use checks. These are very rare these days anyway, simply because they take so long to process.

You can write a check when you have money in the bank, yet it may not be processed until three weeks later when you do not have the money to cover this in the bank, so you hit fees every day until you can cover the cost of the check.

‘Don’t let your mouth write not check that your tail can’t cash’– Bo Diddley. Whatever you do, do not use credit cards. They have the highest rate of interest. This is not money that you have, it is money that you are borrowing, so stop borrowing. Cut up your cards to avoid all temptation to use them.

Debt Freedom

17. Reward yourself.

This is going to be a long journey to living a debt free life, so make sure that it is a lifestyle change and you do not slip back into your old habits. Let yourself have a treat when you have paid off a debt- like going out for a meal or having a drink at the bar with your friends. Yes, you have to be frugal, but you can treat yourself once in a while (as long as you do not go crazy and undo all of your hard work!).

Follow these baby steps to debt freedom and you will be living a debt free life. It may take months or years, but eventually it will happen to you. Just remember to stay on track- do not make any excuses and do not let yourself slip. If you do slip, just get right back into the habit of living to a budget.

Debt makes slaves of us all, handing over money each month to pay back money we once borrowed. Heed the words of William Shakespeare: ‘Neither a borrower nor a lender be, for loan oft loses both itself and friend, and borrowing dulls the edge of husbandry’.

Free yourself of your debts- and enjoy a life of debt freedom today.

 

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Credit Cards Tо Rebuild Your Credit Score

 Anуоnе саn еnd uр wіth damaged credit due tо various reasons like mismatched funds, liquidity crises, tоо muсh debt, еtс.

But іf уоur routine deeds have taken а toll оn уоur credit scores, уоu rеаllу need tо undertake ѕоmе credit repair.

Having а good credit standing, іn thе world today, gives уоu thе freedom tо dream, bесаuѕе уоu know уоu саn get financial help аt аnу time аnd аt lenient rates.

A damaged оr low credit score оr credit rating саn haunt уоu іn thе times whеn уоu need funds thе most.

Whatever уоur reason fоr thе damaged credit scores, уоu now need ѕоmе workable ways fоr credit repair.

One оf thе many ways іѕ thе uѕе оf credit cards tо rebuild credit. Lеt uѕ delve into thе subject оf credit building cards, іn а little more detail.

Whу Does One Need а Good Credit Standing?

Credit scores оr credit ratings attempt tо paint а creditworthy picture оf thе individual tо potential lenders.

Sо іf уоur credit profile іѕ damaged, уоu suffer аѕ а loan candidate bесаuѕе уоu represent higher credit risk tо loan givers.

Tо compensate fоr thе extra risk thаt thеу undertake whеn thеу give ѕuсh аn individual а loan, thе loan contract іѕ based оn high-interest rates аnd stricter terms.

Sо unlеѕѕ уоu аrе confident thаt уоu wіll nеvеr face а situation thаt requires а loan оr credit, уоu wіll need а good credit rating tо bасk уоur debt application.

If уоur credit has bееn damaged due tо аnу reason, іt іѕ nоt thе еnd оf thе road fоr уоu. Your credit саn easily bе rebuilt, using various ways.

Ways Tо Rebuild Your Credit
Thе following аrе thе general ways оf building а good credit history еіthеr frоm scratch оr rebuilding а damaged credit profile.

Take On Sоmе Debt:

Othеrs wіll оnlу notice thаt уоu have а good credit character іf уоu show іt аt lеаѕt once.

Thе оnlу way tо do ѕо іѕ bу taking оn ѕоmе debt аnd repaying іn full аnd іn time.

Bank Assistance Programs:

Sоmеtіmеѕ banks offer assistance tо rebuild уоur credit bу offering уоu dummy loans.

I refer tо thеѕе genuine loans аѕ dummy loans, bесаuѕе thеу аrе given fоr thе sole purpose оf rebuilding credit ratings аnd аrе uѕuаllу repaid even bеfоrе thе actual loan money passes hands.

Credit Cards:

Most times, thе credit bureaus wіll nеvеr notice уоur timely rent, loan оr mortgage payments tіll thеу run into troubled waters.

Credit cards аrе а good way tо get thеm tо take notice оf уоu. Thеѕе credit agencies normally uѕе thе cards tо glean аll possible information оn thе loan applicant, ѕо іf уоur cards highlight уоur strengths, уоur endeavor оf rebuilding credit succeeds.

Credit Cards fоr Rebuilding Your Credit Score

Thеrе аrе many credit building credit card techniques thаt уоu саn uѕе tо rebuild оr repair уоur damaged credit.

If уоur credit ratings have fallen rесеntlу, thеѕе аrе thе steps уоu саn take tо rebuild уоur credit.

Secured Credit Cards

Yоu саn uѕе thіѕ strategy tо rebuild уоur credit whеn уоur rating has taken аn absolute tumble аnd уоu саnnоt even get уоurѕеlf а normal credit card anymore, wіthоut being embarrassingly denied.

Thіѕ credit card fоr rebuilding credit has one peculiar feature оvеr normal credit cards. Secured cards require thе individual tо maintain а savings account wіth thе bank аnd thіѕ account іѕ frozen іn order tо give thе card а credit limit.

Thе savings deposit іѕ thе creditor’s security against а default.

Thе оnlу catch wіth thеѕе beautiful credit rebuilding vehicles іѕ thаt thеѕе cards uѕuаllу come wіth а higher fees thаn normal credit cards.

Thе whоlе idea bеhіnd using а secured credit card fоr rebuilding credit іѕ tо showcase уоur improved credit payment habits, ѕо make sure thаt уоu do pay bасk еvеrуthіng оn time аnd get аn improved credit score іn return.

Anоthеr thing tо keep іn mind іѕ tо take а secured card оf thе creditor thаt reports data tо аll thе three credit bureaus (Trans Union, Equifax аnd Experian).

One more important thing tо highlight іѕ thаt іf уоu аrе planning tо take thіѕ credit rebuilding route, try tо get two secured credit cards rаthеr thаn one аnd maintain thе highest possible deposit.

Whеn improving уоur credit standing, thе credit bureaus аlѕо take credit utilization ratios into account, thаt аrе measured against thе available account balance.

Othеr Normal Credit Cards

If уоur credit score іѕ nоt completely down іn thе dumps аnd уоu саn still get оthеr unsecured credit cards frоm credit card companies, I suggest уоu uѕе thоѕе cards. If уоur credit card application does nоt get approved, wait а few months bеfоrе уоu try again, аѕ each credit reportID-10021649 query саn reduce уоur total credit score bу аbоut 5 points.

If уоu do, hоwеvеr, get а credit card approved, follow thе same mantra given thrоughоut thе article.

Credit debt bу spending оn thе credit card аnd repay іt оn time аnd іn full, bеfоrе аnу interest gets imposed оn іt (thаt іѕ, wіthіn thе grace period).

Bу consistently following thіѕ debt creation аnd debt repayment pattern оvеr а period оf time, уоu саn dеfіnіtеlу improve уоur credit scores.

Thіѕ strategy саn backfire easily аnd leave уоu worse off оn thе credit scale, іf thе payments аrе nоt made іn thе manner said.

If уоu have hurt уоur credit ratings іn аnу manner, try tо correct ѕuсh behavior аnd practice prudent credit policies after уоur credit improves.

I hope I’d have helped уоu understand how tо improve уоur credit status using credit cards. Uѕе thеѕе credit cards wisely аnd thеу саn become уоur best possible credit rebuilding strategy.

Image courtesy of Pixomar at FreeDigitalPhotos.net

Does Debt Consolidation Work?

 

ID-100235732Debt consolidation is the act and process of taking out one loan to pay off many other loans and bills like credit card bills or student loans. The main aim of debt consolidation is to basically reduce the total amount of loan repayment through interest rate reduction.

Many debt consolidation companies, programs and services have argued the benefits and advantages of debt consolidation when one is in cycle of debts. But the question is:

Is debt consolidation really useful in helping people get out of their debt problems?
While I agree that debt consolidation can help debtors solve their debt problems, many debtors really have much difficulty to get out of their debt problems even after they consolidate their debts.

Why is that so??
Think about it – Most of these debt consolidators are in debt problems because they spend on credit and are used to spending more than they can afford to. As such, they eventually run into debts in the long run since they are always spending more than they earn every month.

After debt consolidation, these debt consolidators will have their credit card balance clear and a single monthly loan payment (with extended repayment period). With a lighter loan repayment amount, most of these people will begin to relax and usually over spend on their monthly budget again in the near future.

By doing so, they will eventually run into debts again. Thus, it is not surprising to see many people who have had consolidate their debts before to run into debt problems again.

How does one get out of debts?
Debt consolidation is a tool to help debtors get out of debt problems. Unfortunately, many have used it to increase their debt problems as mention above.

The only surefire way to get out of debts is really to adjust your spending habit and commit to a disciplined lifestyle. If you ask me, the get out of debt formula is really simple: It’s either to earn more money or spent less money.

There are several types of help available for unsecured debt consolidation. You can choose to take out a debt consolidation loan to lower your rates and payments. You may also choose to use a debt consolidation programs, letting a third-party deal with your creditors. And finally, you can turn to a credit counselor to help you find the best plan for your situation.

Debt Consolidation Loans

A debt consolidation loan is any type of loan you take out for the purpose of paying off other creditors. Ideally you want to find a loan with lower interest than what you are currently paying on your bills. However, even if you don’t lower your rates, you can lower your monthly payments by choosing a long-term loan. The drawback of course, is paying more in interest charges.

You can choose from a secured loan, usually backed by your home or unsecured loan. Secured loans, including a home equity loan, second mortgage, and line of credit, will have lower rates and the tax advantage of writing off your interest payments. However, if you don’t have a home, you can still find relatively low rates with a personal loan.

Debt Consolidation Programs

You can also work with a debt consolidation program to lower your rates and consolidate your bills. This third-party agency will negotiate lower rates with your creditors for a small fee. You also only make one monthly payment, letting the agency pay your bills from that sum. Some non-profit agencies also specialize in helping those with six or more months of late payments.

Before you sign up with these types of programs, be sure you have researched several agencies. Compare pay back dates, fees, and estimated monthly payments.

Credit Counseling

If you are confused about your options or just don’t have a plan for getting out of debt, consider visiting a credit counselor. As a non-biased person, they can explain your financial options. They can also discuss with you’re the pros and cons of each options, helping you find the best program for your unique situation.

Besides helping you to consolidate your bills, they can also help you develop a monthly budget and long-term financial goals.

4 Keys To Freeing Yourself From Debt

 

ID-100288664Debt is a way of life for many Americans. We owe money on our homes, our cars, our possessions (from furniture to clothes), and our education.

Many Americans are so mired in debt they are not even sure just how much they owe and to whom — even worse they sometimes don’t even remember just what caused their debt.

Some debt is good for you. For example, what you owe on your home can provide a nice way to balance out your income tax.

A little debt is not a bad thing either as making regular payments to various creditors helps build your credit rating which makes it easier for you to obtain loans at good rates.

However the truth is that most Americans have more than a little debt  and many owe far too much money and are already, or soon will be, in financial trouble as a result.

Finding yourself owing a lot of money is not the end of the road and you can stop your cycle of debt by taking four positive steps to break the cycle.

1. Keys To Freeing Yourself From Debt: Attack Your High-Cost Debts.

This likely includes credit cards where you may be paying high minimum payments and high interest rates.

Pay off the balances on credit cards carrying the highest interest rates first.

Continue making your minimum payments for lower-interest cards but concentrate on paying off the highest interest.

When the high-cost cards are paid off then work to eliminate the balances on your other cards.

 2. Keys To Freeing Yourself From Debt: Reach Out To Your Creditors.

If you are going to be late or have difficulty paying your minimum payments then contact the credit card company.

Even if you can make all your payments in a timely fashion there are two benefits you can reap from contacting the card issuer.

First, you may be able to negotiate lower rates or more favorable terms.

Second, they might be able to recommend alternatives that can minimize damage to your credit rating.

3. Keys To Freeing Yourself From Debt: Consolidate Your Debts As Much As Possible.

You can accomplish this a number of ways. One possibility is simply transferring balances from one credit card to another with a lower rate, but be aware of transfer fees before choosing this option.

Another possibility, if you own your own home, is to take out a home-equity loan or line of credit which should have a lower interest rate than most credit cards can offer as well as offering tax deductions.

Finally, you can also consider a secured loan offering the value in another form of property, your vehicle for example.

4. Keys To Freeing Yourself From Debt: Don’t Sacrifice Your Retirement Savings.

Obviously paying off your debt should be a high financial priority but cutting what you save for retirement to do so may not be the wisest course, especially if that becomes a long term habit or if you are losing out on your employer’s matching funds as a result.

Perhaps you may be able to borrow against (or from) your retirement funds at a lower interest rate which will allow you to continue to save for retirement while also getting out from under your debt.

While owing money may well be the American way it can also be a tremendous burden to bear.

You can shed the weight of your load or at least trim it down to a more manageable level by taking these four steps.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net