• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

Tips on Avoiding Debt Consolidation Scams

When you are facing debts, it may be very tempting to try anything available in an effort to better control your debt and possibly eliminate it. Certain methods of getting rid of debt, like obtaining a credit card, applying for a big loan to cover all debt amounts, and even debt consolidation may seem like a good idea to use to handle debt, but some of these methods can be more damaging to your credit. Nowadays, there are many debt consolidation scams that target desperate individuals seeking anything that can help them solve their debt problems. So, what can you do to make sure that you do not fall victim to any debt consolidation scams? Continue reading for more information on avoiding debt consolidation scams.

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Knowing When You’ve Been Scammed

When you are searching for debt consolidation assistance, there are a few key factors you can look out for to alert you that you may have uncovered a debt consolidation scam. Here is a short list of those alerts:

  • The service requires a high monthly service fee while providing little work for the money that is being requested.
  • The company takes minimal accountability when a client is dissatisfied.
  • The monthly payments determined are very high.
  • Funds are required to be taken from your bank account.
  • There is no way to keep track of what the company is doing with your payments (i.e. paying off creditors, keeping track of your remaining debt).

How Debt Consolidation Scams Work

Sometimes, you do not realize that you have been involved in any debt consolidation scams until you are well into the process. However, most debt consolidation scams require that you pay an extremely high monthly payment, require high monthly fees for their services, and take little blame for any dissatisfaction that the client may have. There is not track record of the payments that are being made on your account and there is no way to prove that the company is even using your payments to pay off creditors. Some debt consolidation scams take payments directly from your bank account without your consent. When you try to contact the company for answers, you are unable to locate a reachable number, address, or email. Instead of receiving calls from your debt consolidation company, you are still receiving calls from your creditors. Despite you paying tons of money toward your debt consolidation, you are still able to be sued by creditors because none of your money is being sent to them to satisfy your outstanding balances. Because of the debt consolidation scams, you are now at risk for losing any valuable assets and even more money than you have invested into getting rid of your debt.

Recovering from Debt Consolidation Scams

If you have been a victim of any debt consolidation scams, you may be even more hesitant to search any further for a reliable debt consolidation company that can really help you to resolve your debt issues. But first, there are some crucial steps that you must take. Firstly, if your payments are being drafted from your account, you should close the bank account immediately to avoid any further transactions. Also, you can check the contract that you signed and update yourself on the laws of your state. In some cases, you may be able to sue the company that is claiming to be a debt consolidation company. It is also a great idea to contact your creditors to inform them of your intent to settle your debt but of the scam of which you were unknowingly a part.

The last step is to do thorough research from good debt consolidation companies that will help you to solve your debt problems. A good place to start is with your financial institution. Your bank may be able to provide you with a list of debt consolidation programs that may be beneficial for you. If not, you can search online for debt consolidation companies but beware—the internet is probably where you came across your first debt consolidation company that turned out to be a scam. There are tons of reliable Debt Relief Companies that specialize in debt consolidation and will help you get on the right track if indeed debt consolidation is the right solution to your debt problems.

Being involved in any of the debt consolidation scams that are out there can turn your bad debt into horrible debt, so you must make sure that your debt consolidation company is there to work for you and not make you work harder to handle your debt. If you have already been a victim of a debt consolidation scam, do not be ashamed or hesitant to try again. There are many of individuals who have been bamboozled by a company claiming to help individuals solve their debt issues. Do thorough research to ensure that the company you are reaching out to is willing and able to give you a helping hand.

Refinancing and Debt Consolidation Checklist

If you choose to refinance your mortgage in order to consolidate debt, then this option is tempting. Conversely, if you want refinancing and debt consolidation to work for you, it is important you are familiar with the potential drawbacks. Read on and discover the different factors involved in this as well the advantages and disadvantages, which will all help you in making the decision.

Refinancing And Debt-Consolidation

Mortgage rates

The obvious demand is mortgage rates, which are generally lower than interest rates on debts. If you are someone with equity on your home and choose to refinance, then you can borrow this equity in order to pay off debts, such as personal loans and credit card debts. The Federal Reserve states that credit cards were charged 13.14 percent during the times the 30-year mortgage rate was at 4.20 percent, which was just recently. This means the likelihood of lowering interest on your debt is clear. If you choose refinancing and debt consolidation, multiple payments will be replaced with a single mortgage payment, which simplifies your finances.

Downsides

The problems with refinancing and debt consolidation are the fact stakes are raised. The mortgage debt openly puts your house at risk even though credit card debt along with other obligations usually cannot lead to claims against your home. Another problem is you could be lengthening the period of your obligation by adapting short-term consumer debt to mortgage debt.

One thing you must do is focus on refinancing and debt consolidation, which is why the list below helps to outweigh the potential problems and gives you a list of the matters you must observe.

Checklist

  • 15 year and 30 year options
  • Prepayment penalties and closing costs
  • Comparing mortgage quotes
  • Meeting the new payment schedule
  • Interest cost
  • Mastering budget issues

When you look into your equity for refinancing and debt consolidation that is only when you will know how much you have. If you have a large amount, then this obviously means you are into numerous years into your mortgage. If you do find yourself in this situation, then you may want to consider getting a low refinance rate, which happens by refinancing to a 15-year loan.

When it comes to refinancing and debt consolidation, the most compelling part is comparing the interest rate. One thing you need to ensure is the interest rate gap covers the costs that are part of refinancing. This includes prepayment penalties on your loans and mortgage.

We all know that refinance rates tend to be lower than usual, but this does not mean they are all the same. The best way to go into refinancing and debt consolidation is to shop around for mortgage quotes.

The risk usually arises with meeting the new payment schedule. Once the terms and principals of your new loan have been worked out, it is important you look into the payment schedule that will be the outcome.

You need to ensure that refinancing is not costing you more, even if you are lowering your interest rate. This can happen because you may be paying less interest, but at the same time, this could lengthen your repayment period, which is why you need to check.

If you choose refinancing, this does not mean you can easily take on more debt. You need to start mastering your budget and live within your means. Refinancing and debt consolidation is a good idea, but does have its pros and cons.

Advantages

The main reasons to why people consolidate debts are to:

  • Reduce monthly payments.
  • Cope with a single payment instead of multiple payments.
  • To save money in the time costs and interests are low than that of the old loan arrangement.

Disadvantages

In the short term, this may be a good idea; however, some of the cons include:

  • In order to get out of loans you already have, you may have to pay exit fees.
  • The charges and fees of maintaining and setting up the new loan can be more expensive.
  • Changing your debt from unsecured to secure over your home, will decrease the equity of your home, which makes everything more expensive, as you will be paying off debt for longer.

Traps

Before you consider this option, it is important you seek some help and advice from a reliable service. Some lenders are better than others are, as they are all not the same. One thing you do not want is to become victim to a fraud-type lender. You will know this if they charge you with higher interest, which will ruin your current situation, making it worse. This is why you should seek help from a trustworthy service, especially if your home is security. Some lenders may only refinance on an interest only term, which is usually for one or two years. Under this arrangement, the individual usually has a corresponding level of debt at the end of the loan, even though they have made all the necessary payments.

Debt Consolidation Traps

If you have a high interest rate credit card then you’ve probably looked into some debt consolidation loans to help you out of debt. These are useful in that they can lower that interest rate and help you pay down your debt quicker. There are several debt consolidation traps out there however, that make that dream even harder to achieve. They promise to make your payments lower and don’t deliver, giving you even more debt than before. This can be a problem is you’re already struggling with the debts you have. Below are four ways to recognize if you’ve fallen into debt consolidation traps, and how to avoid it if you’re considering a loan.

Cure-all loan

The main goal of taking a consolidation loan in the first place is to reduce your debt, and help you climb out of it. However, these loans don’t exactly have the best track record. 70% of those who fall for debt consolidation traps like this are more likely to end up with the same amount of debt or more just after a few years of taking on the loan. A good example would be if you used this type of loan to pay off credit card debt, but now that the card is paid off you’re most likely going to use the card to pay for something else, maxing it out again.

Why is this happening? Debt consolidation loans allow you make your debt more manageable, but that doesn’t change your spending habits. Your debts had to come from somewhere originally, and once they are paid off with a loan, if you have bad habits, you’ll just fall back into the debts you had before.

Debt consolidation loans are a bad thing when used wisely. They can be useful in making payments smaller and more manageable. However, it will only work long term if you’re willing to change your spending habits. This can save you from having to get another loan, and keep you debt free.

Expensive consolidation services

Debt consolidation traps can include the use of a consolidation service. These services can charge you interest fees, up-front fees, or monthly fees. These services don’t offer services that you can’t do yourself, and they may cost you more in the long run. These services can be a big help if you’re not sure what you’re doing or how to go about using your loan, however, if they cost you more than you’re willing to spend then it might be a good idea to explore other options.

Looking into options yourself can save you money on an expensive service. Moving your high interest credit card to a lower interest rate, or getting unsecured credit, or taking out a home equity loan are all options that you can use on your own, without the use of these services.

Paying more interest

Debt consolidation traps also include this hidden cost of a loan. You may have lowered your interest rate, which is great, but, now you have to pay the cost, which is having to pay more interest payments. The reason your payments have become lower is most likely due to the fact that the loan as stretched out the amount of time you’ll have to pay. An example of this would be if you originally had a 3 year loan on a car and after taking the debt consolidation loan it has been stretched out to 7 years. This remains true even if the interest rate has been lowered.

Taking into consideration all your debt and whether or not you can pay it off one debt at a time can save you money on interest. Use an online calculator to see how much a consolidation loan can save you, or help you to decide to consolidate at all.

Using your house as collateral

Debt consolidation traps get very serious if a home is at risk. When you put your home on an equity loan or a line of credit you put your home at risk for being lost. By using your home you are telling the lender you’re willing to put your home at risk to consolidate your debt. By choosing this option you change from an unsecured loan over a secured loan, by using your home as security. This may seem like a great idea with interest being low, but your home is your greatest, and most important asset.

If you do choose to use your home as a way to consolidate other debts be sure you are able to make that extra payment. Another important thing to remember is to leave at least 20% of your home’s equity intact for taking out a line of credit or even taking on a second mortgage. If you default on the consolidation loan you can lose your home in foreclosure, like defaulting on your mortgage.

Why Does Your Credit Score Matter

Chances are you have a good idea of exactly what where your credit score lies.  It’s just that little number, following you around everywhere with its big, sad eyes, and it might be 600, it might be 700, or it might be even higher – but does it actually matter?  And do you actually know what it is and why it matters?

How credit scores are calculated

The simplest explanation: your score is just your credit report’s numerical representation, based on mathematical formula developed by the Fair Isaac Corporation (now simply FICO).  Three credit report bureaus exist – TransUnition, Equifax, and Experian.  All of them select credit scores based on information from your score (compiled by FICO), but they each use a different proprietary formula.  It’s possible to have three separate credit scores, but as you can probably guess, a higher score comes with a better report.

Why your credit score matters

The first look a prospective lender will take before approving a credit application is right at your credit score.  The range can go down as low as 300 and up as high as 850 – and a score higher than 800 means you are clear when it comes to lending.  On the other side of the spectrum, if your score is lower than 500, you might have problems getting credit.  Lenders will see you as someone at risk not to pay them back, and the credit they do give you will be at a high interest rate.

Reasons for bad credit scores

You might lack any sort of credit history, you may have defaulted on personal loans, dealt with the pains of a foreclosed home, filed bankrupt, or been late making payments on existing debts.  These are all the types of things that contribute to a low score.

What you can do about your bad credit

The first thing you need to do is learn your credit score.  Check out www.myfico.com – if you sign up for a trial, only two-weeks long, of the FICO Score Watch, you can get your score for free.  If not, it’s only twenty dollars.

If you find out that you do, in fact, have a poor credit score, there are ways to improve that.  There are things called ‘secured credit card’ – you deposit cash to the company issuing the card, and the card is then charged until reaching a zero balance.  A large number of these cards are available, but be sure to check out fees before signing up for one, as some of them can soar fairly high.

Think about credit in a different way

Although it might sometimes feel like free money, you have to remember: it’s the exact opposite.  You don’t want to use credit for emergencies, unless there are absolutely no other alternatives open to you.  In an ideal world, you would never put anything on credit unless you could immediately pay it in the same month to avoid keeping any kind of balance in the future, but in the real world, there are problems, some self-inflicted and others brought upon us by powers beyond our control.  But one thing you can do is avoid shopping splurges.  This isn’t just when you go on a wild shopping trip.  It applies to smaller things – buying a round for your friends, eating out big one night, or purchasing tools to keep yourself entertained.  No matter how it happens, not being careful about splurging can rack up some serious credit debt.

Debt consolidation can be your rescue

At times it might feel like you don’t have a way out.  Your poor credit score comes from your debts, and you have trouble paying your debts – it can be a painful cycle, but we can show you the way out.  Our debt relief professionals offer you a simple way, 100% satisfaction guaranteed.

If ever, you grow dissatisfied or jaded with the debt relief programs we recommend, canceling out is free – you’ll see neither fees nor penalties come your way.  We are confident in the help we can provide to make you debt free in reasonable time, and in the process, we’ll save you thousands.  Fill out the forum on this page or dial our toll-free phone number, and we’ll give you even more information.  It might just be the smartest decision you make this year.

Are You Looking For The Best Way To Consolidate Debt?

If you are looking for a way out of a mountain of debt and you are looking at your options then you might want to consider what the best ways to consolidate debt are. Finding a consolidation loan that can save you money each month will relieve the stress that being in debt can cause.

Best Way To Consolidate Debt

What You Are Looking For

If you are looking for a consolidation loan you need to consider the options that make the loan worthwhile.

  • Lower monthly payments
  • Lower overall amount payable
  • Lower interest rates

It is important that you consider all the options that are open to you and work out if the loan is going to save you money, there is the possibility that the loan might cost you more long term and this is not going to make your life any easier.

Using a Credit Card to Consolidate Debt

You are looking for fixed rates over a set period of time, there are often great deals on 0% APR and these are fine but work out the price of the transfer, often included in these deals is a fixed price for transferring the debt and sometimes this can be just as expensive as a low interest rate fixed term balance transfer. So, it is important to do your sums and work out the best deal for you.

You might be able to get a great deal from your current credit card provider, tell them if they aren’t prepared to offer a good deal you will take your business elsewhere. This will give you the best deal and the best way to consolidate your debt.

It is important that you look at your debt and work out a plan to become debt free in x about of years; ideally you are looking for it to be between 3 – 5 years. Be cautious with the amount of credit applications that you fill in and apply for because it will do more harm than good to your credit file.

Borrow Against Your Home

It is possible that the best way to consolidate your debt is to borrow against your home. This might be the cheapest way to secure a loan because there is something that the loan company has an agreement, if you fail to pay the debt then your home will be repossessed.

The amount that you will be able to borrow will depend on a number of factors, the amount of money that you currently owe on your mortgage, the value of your property and the equity that is available. This is the difference between these two figures; it is this equity that you will be borrowing against. If you don’t have any of this equity it is very unlikely that you will be able to borrow against your property.

But if you are able to use your home to secure a consolidation loan then you need to make sure that it is at a great rate, this might be the best way to consolidate your debt.

Using Credit Counselling

If you are struggling to understand the complexity of your situation and you know that you need help then the best way to consolidate your debt is to ask for professional help.

A credit counsellor will look at your financial situation and work out what your best options are, they might suggestion you try a debt management program and this will involve paying the debt management company a payment each month and they use this money to pay off your creditors. Many times a debt management company are able to secure a reduction in the amount of interest that you are paying and this will mean that you will become debt free quicker.

You must remember the effect that some schemes can have on your credit file, being enrolled with a debt management company will show on your credit file and this can have an implication on some credit companies, they can increase the interest rates that they offer or refuse you credit.

Choose Your Company Carefully

If you are looking for the best way to consolidate your debt and you choose a company you will need to make sure that the company that you pick has a reliable reputation because if they make a late payment to your creditors then it will not be their credit file they will be damaging but your own.

It is possible for you to do the hard work and plan to pay off your debt yourself, but you will need to be focused and have a plan, it is important that you just start the plan now, there is never going to be the perfect time for sorting out your debt something will always get in the way and it is important that you consider your options and make the changes now.

Analyzing and Finding the Best Debt Consolidation Loan

Are you facing debt problems and failing to manage them? It definitely makes you crazy when you spend your nights worrying about your debt payments, starting with a dozen credit cards you have been enjoying using. You should not end up on any settlement instantly. You must obtain accurate and sufficient knowledge to choose what’s best for you. It’s unwise to make a decision without doing proper homework.

Finding the Best Debt Consolidation Loan

Considering Your Options

If you are out of money and have to do something about your dues right away, look out for all possibilities.  Bankruptcy is one option but you would be scared of loosing you assets as stated in Chapter 7 bankruptcy. No one wants to be in such a position unless there is no hope.  You would have also tried talking to some credit counseling agency but all they could do is to lower your monthly payment a bit and lessen their harassing calls. This would be no good if your situation is serious. Here you are, ended up thinking about the best debt consolidation loan as you can find no other way out of your nightmares!

Analyzing a Debt Consolidation Loan

What is a best debt consolidation loan?

A best debt consolidation loan lets you merge all your credit card debts into a single debt. The benefit by doing this is that becomes a lower monthly payment, more affordable, and you avoid the hassle of dealing with plenty of loans separately. It basically makes your life simpler and easier.

Difference between credit card debt and a debt consolidation loan

The main difference between them is same as the difference between a secured and an unsecured debt.

Secured loans

These are debts that are secured by collateral such as a house or anything you own. The risk attached to such a debt is that you will eventually lose your asset if you fail to make your payments. It gives the lender the authority to sell the collateral.

Unsecured loans

These are loans that are not secured by any asset. If you fail to pay for them, the lender can do nothing but to hand you over to collection agency and ask you for payments. Credit cards are a type of unsecured loan.

However, it is not at all easy to meet the requirements for a loan to consolidate your debts. It requires a high credit score such as 700 FICO normally. Sometimes 740-760 is needed to obtain a low rate to make the consolidation useful.

Pros and Cons of a Best Debt Consolidation Loan

  • As we mentioned earlier, the debt consolidation loan is an unsecured loan. If ever you fail to make your payments you merely have nothing to lose. You are not obliged to use your property, car, or any valuable asset against the loan. As debt consolidation loans are unsecured debts, a few companies that offer such loans include Lending Tree, the online lender and Instant Debt Consolidation Loans.
  • Another benefit of such a loan is that it requires you to give fixed monthly payments. Well, this applies to a secured loan as well.
  • When applying for a debt consolidation loan, you must make sure that you agree on a fixed interest rate. There are options of fixed as well as promotional interest rates. Certain banks and credit unions will try to convince you by tempting you with a special promotional rate. You should remember that such rates normally last only for around six months and then jumps into the stratosphere.
  • A problem with unsecured loans like debt consolidation loans is that they are normally offered with a higher interest rate as compared to secured loans. In a secured loan, the lender feels protected because he knows that can has the authority to sell the collateral you offered him. In unsecured loans, however, is taking a bigger risk by giving you the money without exchanging anything. Thus, you will be charged a higher rate.
  • Even the best debt consolidation loan has a downside! This is a just a means to merge your loans, therefore, the amount you owe is same as before. On the contrary, some companies manage to negotiate with credit card companies to reduce your total debt amount and sometimes lower monthly payments. Such companies are known as debt settlement or debt relief companies.

It’s better if you go for actual reduction in debt. National Debt Relief is a company ranked among top three debt settlement companies. Isn’t it great if you get a debt analyses and seek advice from them free of cost. They charge you nothing for advice. Only when they are able to negotiate a suitable settlement with your lenders they charge their fee. When you are already short of money, this seems like the most appropriate alternative.

How to Pay Off a Debt Consolidation Loan

Debt consolidation loans can be a useful tool to pay off credit card debt but only if you use it correctly.

What Is Debt Consolidation, Anyway?

How to Pay Off a Debt Consolidation Loan

Debt consolidation is trading a single debt for a number of them, such as using a new credit card to pay the balance on two or more others. The pros of this solution are:

  • Obtaining a lower interest rate on the new card than on the cards you are paying off
  • Having a minimum monthly balance below that of your old cards combined
  • Feeling empowered and hopeful about your ability to get out from under your debt by reducing your number of monthly bills

There is sometimes confusion of debt settlement or debt management for debt consolidation. The first two do not change your current creditors. They involve other people negotiating new terms for your old contracts. The problem with these options is a possible negative effect on your credit score because the payments you continue to make are not given immediately to your lenders. With a debt consolidation loan your creditors are immediately paid and your credit score is not negatively impacted.

Debt Consolidation May Not Be Perfect

You will have a new line of credit and lower payments. It is all too easy to find yourself using the additional money meant to pay off your debt consolidation loan for purposes other than paying more than your minimum balances or using your new card to increase your debt. It will be important to recognize how you got into the predicament you are in and take strict steps to avoid the temptation of repeating them.

Pay Off Your Debt Consolidation Loan

Take some time to examine the way you created the debt. It could be that you are just not great at controlling your impulse to purchase things you enjoy, or perhaps you feel pressure to keep up with those around you. Not all debt is a result of overspending. It could be that you had a medical issue or home emergency that required you to make financial decisions you might not have otherwise made. Whatever the case in order to pay off a debt consolidation loan you will do well to continue to make the payments you did before over and above the new minimum due, if not more. This will ensure you are paying off as much as possible of the principle of the new loan.

You could use a peer to peer or home equity loan to consolidate your debt instead of a credit card. These loans are closed-ended so you will know the date that the loan will be paid in full even if you can only make the minimum payments each month. Emotionally this can be a great motivator. Being able to see the end of your financial struggles will allow you to plan for great things to do when your goal is accomplished and stay on track. There is another benefit to these options. There will be no additional credit card to tempt you into purchases you cannot afford. With a credit card consolidation you must be sure you can pay off the entire debt before your lower interest rate period ends. If you are not positive this can be accomplished you could end up with higher monthly minimums than before. This can lead to opening new cards for more balance trading and may end up ruining your credit as much as loan management or debt settlement. Now is the time to be honest with yourself and make the difficult choices.

Do not ignore the emotional factors when making a decision about your financial future. Be brutally honest about your ability to exercise self-control as well as what you will be giving up. If you have an indulgence that is of deep importance to you, being able to have a manicure once a month, a standing dinner date with a group of friends that you would feel lonely and left out without, make room in your plan for this so you don’t end up being frustrated and over spending to make yourself feel better.

The best part about learning to pay off a debt consolidation loan is creating good habits you can use for the future. Whatever the cause of your debt you are now equipped with the knowledge of how to avoid these pitfalls in the future. You have culled excessive spending from your lifestyle, learned to enjoy a social life without pricey nights out, and hopefully determined what luxuries are most important to you. When the loan is paid off you will now see how much additional income you have. Consider meeting with a financial planner to discuss the right balance of saving for emergencies, retirement and special treats. A clean slate is a wonderful opportunity for personal growth.

The Guide to Getting a Debt Consolidation Loan

Getting a Debt Consolidation Loan

With debt overwhelming you and creditors calling you to claim their debt, you would do anything to get out of debt, wouldn’t you? There are several people, giving you several bits of advice on how to get out of debt, but a decision about which bit of advice to take and which to leave behind can be quite hard. But, if more than half of the people giving advice suggest one particular solution, would you think it viable? I would. More than half of debt management advisors out there suggest getting a debt consolidation loan to manage your debt. But, before you get a debt consolidation loan, get all the facts on debt consolidation loans and what to look for when getting them.

Why Get A Debt Consolidation Loan?

There must be quite a few reasons advisors suggest getting a debt consolidation loan to address spiraling debt. Here are a few:

All your debt in one Place:

When you get a debt consolidation loan, it poses a great solution to reducing debt. A debt consolidation loan pays off your creditors in full so instead of having multiple loans from multiple creditors, you have one loan to pay off.

Low Interest:

The interest rate savings with debt consolidation loans, especially if your outstanding credit is with high interest credit cards. While debt consolidation loans are not low interest, they carry relatively lower interests than credit cards which carry an interest rate of up to 25%. In addition, it consolidates your debt and you only have to pay one interest rate rather than paying several high interest rates.

Comes with Support:

When institutions offer debt consolidation loans, they are very motivated to keep you debt free in the future. In order to do that, these institutions also offer you financial advice for future spending. They offer budgeting tools and financial advice to keep you out of debt.

Credit Scores:

No institution can erase your negative credit history with outstanding debt, but with a debt consolidation loan and proper financial advice, you get a chance to pay off your debt and improve your credit score in the future. Slowly, but surely, your credit history will improve.

What to Consider When Getting a Debt Consolidation Loan?

There are several things you should know before you apply for a debt consolidation loan:

Get in Early:

Being in debt can be overwhelming. But, the best advice that financial advisor give is to get in early. Consider getting a debt consolidation loan as soon as you see signs of personal financial distress. It is akin to nipping it in the bud as opposed to letting the problem grow out of control.

Consider Reputation:

When considering getting a debt consolidation loan, consider the reputation of the institution you are considering. Ask about the reputation of the institution and look them up with the Better Business Bureau. Get credit only with reputed institutions- ones with no complaints and solid foundations.

Get only as much as you can pay:

Consider your income when getting a debt consolidation loan. Get only as much in loan as you can pay back every month.

Consider what you are borrowing against:

When giving you a debt consolidation loan, creditors usually consider your existing income, your existing collateral and the amount of debt you have. Many times, you do have to show collateral to get a loan. Consider carefully what you put up as collateral as an inability to pay off your debt consolidation loan could result in you losing your collateral- be it house or land or precious metals.

Look at the Big Picture:

Before getting a debt consolidation loan, know that this is a big step. Debt consolidation has to be a long term solution rather than a short term band-aid. You have to be committed to getting out of debt and being debt free in the long term.

Shop around:

As with every other thing you buy, be sure to shop around for debt consolidation loans. Consider the term, fees and the interest rate as you look for these loans.  In addition, when you find an institution with decent terms, you can tell them that you are also considering their competitors to get a better rate out of them.

Read the Fine Print:

Read all debt consolidation loan terms carefully. Read all the fine print and know what you are getting into. Be sure to clarify every term and ask questions before you sign up for a debt consolidation loan.

While there are several debt consolidation solutions out there, debt consolidation loans are a viable long term solution with a focus on getting permanently out of debt. But consider, very carefully, what you are getting into and that you are the focus when getting debt consolidation advice.

What Do You Think Was Your Best Financial Decision Ever?

Mature couple looking at their cameraWhat’s the best financial decision you ever made? Was it to pay off your debts? Might it have been to start a budget? Or was it a great investment?

Pay off their mortgages

According to an article that appeared recently on the Yahoo! Finance website, 40% of the people age 55 and older said that their best financial decision ever was to pay off their mortgages. In second place at 40% in the over-65 group was that they started saving early. This was based on a survey done by Harris and Associates which also found that people age 25 to 54 said their most important financial decision was to start saving early while 56% reported “making sure that my family is protected”.

Later in their careers

As you might guess, the idea of paying off the mortgage became a higher priority later in people’s careers after they had amassed enough savings for an emergency and paid off other debt.

Does it really make sense?

While many people think that paying off their mortgage was their best decision, this isn’t necessarily true for everyone. If you’re not claiming a tax induction for the interest you pay on your mortgage then a 4% mortgage costs you 4%. However, if you are deducting the interest then a 4% mortgage actually costs you less than that – depending on your tax bracket.

Paying off debt vs. investing the money

If you’re in the 25 to 45 age bracket, and have a load of debt, you may be wondering whether your should pay it off or invest your money. Fortunately, there is a simple answer to this question. You need to first pay off your debts.

It’s just simple math

The reason why you should pay off your debts first just comes down to simple math. You need to add up the interest rates on your debts and then divide by their number to get an average interest rate. As an example of this, if you have debts with interest rates of 12%, 18%, and 20% your average interest rate would be 16.6%. Now compare that with what you could expect to earn on your savings. Let’s say you were getting an 8% return on your investments. This means that what you’re paying in interest charges far outstrips the earnings on your investments. So, the smart move would be to pay off your debts before you begin investing.

Secured or unsecured debts?

How you pay off your debts hinges on how much you owe and whether they are secured or unsecured. If you have a mortgage this is a secured debt because it’s “secured” by your house. Auto loans are also secured debts. Unsecured debts are those where you were not required to use any collateral to get the loan. These are typically credit card debts, medical bills and personal lines of credit.

How to pay off those debts

If all or most of your debts are unsecured and you owe less than $10,000, you might be able to consolidate them into a new unsecured loan. On the other hand, if you owe more than $10,000, you might have to get a secured loan. In the event you owe more than $10,000 and have nothing you could use as collateral you would have several choices. If you have a good credit record, you might still be able to get an unsecured loan or you could sign up for consumer credit counseling. The third option, debt settlement, is the only way to get debts reduced as well as consolidated. Debt settlement companies such as National Debt Relief have helped their customers save thousands and thousands of dollars and become debt free in 24 to 48 months – which is why it’s become the preferred option of many American families.

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