DEBT CONSOLIDATION

Sound Advice from Jeff York

With loan interest rates at record lows, you might be considering rearranging your debt to help your monthly budget. Lowering the interest cost on your consumer loans means you pay less—right? Well, not always. Consolidating debt can make good sense, but what is good in the short run may actually cost you more in the long run.

When it comes to personal finance, there’s a lot of misinformation that continues to circulate, especially on the internet. Rumors and even flat out lies are presented as truth and can lead the average person to make unnecessary mistakes that will negatively impact their financial well-being.

We’ve decided to round up the most common myths that people believe as true and give you the facts so you can make more informed decisions regarding your money, beginning with debt:

Once you find yourself in debt, it may feel like there are no possibilities of fixing your situation. However, there are ways to eliminate your debt without having to opt for bankruptcy. Some options may take months, while others may take years. But you can pay down and eventually pay off your debt if you really try.

The following three steps can help you get out of debt:

Ryan Guina is an entrepreneur and writer. He has worked for Fortune 500 companies and served six years in the USAF. He writes about money management and small business topics at Cash Money Life and military money topics at The Military Wallet. You can follow his twitter feed.

Consumers struggling with high interest debt have several options available that can help them reduce their number of creditors and lower their interest rates. When used correctly, debt consolidation loans can help consumers get out of debt once and for all. They aren’t without risks, however.

Debt has developed into a given when it comes to modern personal finance. The balance in your bank accounts is rarely enough to cover the costs of monthly expenses, buying a car or home or going to school. In fact, the average household carries about $8,000 in credit card debt alone. It’s probable that just about every American fantasizes about one day obtaining debt freedom.

While debt is usually seen as a negative, it may benefit you and your credit score to owe just a little. Before you go about trying to completely eliminate debt, find out how debt can actually improve your financial situation.

The idea of getting involved in debt management can be an exciting. Once you finally have money to pay your bills you’ve owed for months or years, you very often want to jump right in and begin the process. The only problem with managing debt, however, is that some people don’t know exactly how to go about it. As a result, their debt management dreams actually become a nightmare.

Stories of Debt Management Gone Wrong

Saurabh Dhanuka has made great strides in getting his finances under control, including starting an emergency fund, paying all his bills on time, not getting further into debt, and eliminating his debt (which he plans to complete by the end of this year). Check out his blog All Finance Help.

People use credit cards for a host of reasons. They offer the opportunity of accessing money when you’re short on funds and you don’t need to carry cash with you. These are two most important advantages offered by credit cards. These plastic cards provide easy money.

You know the benefits to having multiple credit cards, however, at this time you have too much debt on multiple cards and the interest rate is too high on many of them. If the technique is used properly, consolidating credit card bills onto one low rate credit card can make managing your debt infinitely easier and more cost affective.

Credit card companies often have promotions such as a low introductory rate or 0% financing for new customers willing to transfer balances from other credit cards onto theirs. Consumers can use those strategies to take advantage of low cost or free loans in order to improve their debt situation. If you find one low-rate card and transfer the balances, it is now up to you to make the system work for you.

The biggest influence on your FICO credit score is your management of personal finances. If you spend more money than you make and are unable to pay off your credit card bills when they’re due, you are certain to see your score going down. The lack financial responsibility will cost you a fortune when the time comes to get a mortgage loan, as you will be subject to the highest interest rates; that is, if you are able to secure a loan at all. If you are finding it incredibly difficult to manage the sheer amount of debt you accumulated, then the debt consolidation may indeed help you out.

Debt consolidation is the process of using one larger loan to payoff a bunch of outstanding, smaller debts. All your debts will be bundled into one neat package that will be easier for you to manage. After locating a loan, all you need to do is calculate the maximum you can pay off monthly, see if you can set your payment date to coincide with a paycheck and then set up an automatic payment plan to ensure that you are never late with a payment.

With a slew of credit card debt, you think it is time to aggressively tackle your finances and clean up the situation.

Debt consolidation may be the process — however, do not be tricked into thinking that the process is going to be inexpensive. Typically a debt consolidation loan is offered at a competitive interest rate, you take that money, pay off all your bills then focus your efforts on paying off that one debt consolidation responsibility.

Higher Overall Cost for Debt Consolidation