Our economy is in a financial tailspin these days, and more people every day are finding themselves in dire financial straits because of overspending and overextending themselves, and looking for ways to clear their slates and get rid of the huge debt load they are carrying. One of the more popular ways for a lot of folks, and an area that has built a huge business around it, is that of helping people in trouble, consolidate debt.
If you have a home, and you have equity in that home; then you have the option of taking out a home equity loan to try and consolidate your debt. These types of loans have low interest rates usually, and the amount of interest you pay on them over the year, is able to be deducted from your taxes; so that’s a good point right there. They most often carry a fixed rate with the term being 15 years, and what you would be responsible for as the borrower would be to pay for the appraisal, the cost of the title insurance, and the charge for the origination fee. A personal loan could be an option too, where the loan is issued on your signature and belonging to a credit union would be a good route to take here, because they quite often are easier to deal with and have better rates.
If you have equity in your home, one of the ways that you could consolidate debt is to do a cash-out refinancing. The way that works is that you refinance your home for more than you owe debt-wise, and use the difference to pay off the debt. The contracts here are usually 15-30 years and although the interest rates tend to be low, the long amount of contract time will jack the cost up tremendously of what you will pay in total. There are ways to get around that too, when you start researching into it. Another possibility that a lot of people forget is their car loan. The loan for the car was a secured loan, and if you really need to, you could borrow against that loan to help with your debt.
Many people are afraid to contact the credit card companies themselves and prefer to have a third party do it for them, but if you can just think of the person on the other end of the phone line as putting their pants on one leg at a time like you do, and they are just doing a job, like you are; then you will have no trouble talking to them about renegotiating your credit card terms and coming to a mutual agreement. Most of them have the authority to alter your terms right then and there on the phone and you can get it done in no time without having to bother with another party intervening.
Traps, pitfalls, and stumbling blocks abound in the world of finance, money dealings, and when you are trying to get help to consolidate debt. Many folks are desperate when they finally call in a third party to help them get rid of the debt, and are so anxious to do so, that they jump at the chance to unload that debt at first strike. Beware. There are all kinds of nefarious people out there who would love to part you and what money you have left under the guise of helping you out with your debt, and one of these areas is with hard money loans. Your credit has seen better days, you have limited options on how to get rid of your debt, and the offer of an “easy does it” loan seems like just what you’re looking for at the time. But; these guys know full well what they’re doing, and they tack on sky high rates; much higher than your credit card rates are that you’re paying now; and you will be spending tons of money for the convenience of one of these easy loans. Also, watch out for the consolidator who will take all the load off your back; leave it up to him; you don’t have to do a thing. Sounds great, until he forgets to make a payment for you, or is late; then what? It’s your already bad credit that gets socked again.
One other thought on how to consolidate debt, involves dealing with an agency that will work with you and not only help you consolidate your debt, but also develop a budget plan so you can avoid getting into this kind of a mess again. One such agency is the National Foundation for Credit Counseling, or the NFCC. It is a nonprofit, community organization that provides confidential and free credit counseling advice for debt management. You can do the consultations over the phone if you prefer, and the organization is paid by the creditors they deal with, so they will be wanting to set up a repayment plan for you and the creditors that is agreeable to both parties.
How pleasant life could be if we all had all our bills paid off and no debt weighing down our shoulders. There are folks that live life like that, and you can too when you take the initiative to just start getting your debt under control by working out a plan of attack to consolidate that debt. It will be a struggle at first, but the rewards are worth it and a life without crushing debt can be very fulfilling.
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