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Debt Consolidation and You

In these tough economic times, it's easy to fall a little behind. It's not so easy to catch up again though, is it? Often when people fall into debt, their first priority is keeping their head above water, never mind getting back to dry land. Don't give up though, it can be done! Have you considered a debt consolidation program? There are many designed to help people with lots of debt get back into the green and go on to live without the shadow of debt hanging over their lives.

There is a certain stigma attached to debt in our society. People are said to be irresponsible spenders, often by people who've never had to weigh up the choice between making rent on time, paying an electricity bill and putting food on the table. In some situations, extensive lending seems like the only solution. Don't let the opinions of other people get you down, often they haven't experienced what you are living with and if that's the case, they simply can't understand what you're going through.

Rather than just continuing to make ends meet, you are more than capable of taking control of your finances. The first step is to track exactly what you're spending, when and where. When you have different bills coming in at all times of the month, it's easy to loose track of how much you're paying back to different lenders. One of the first solutions to consider is a credit card debt consolidation loan. The most important benefit of debt consolidation is that you will condense your debts into one easy-to-manage debt.

Credit Card Debt Consolidation Loans

While your debt may have prevented you from being eligible for other credit cards, a credit card debt consolidation loan is designed for people who want to pay off their debts on credit and your credit history shouldn't be a problem when applying for these programs. Consolidation in this way can put a significant ease on day-to-day living, as you can sit down with your lender to design a repayment program they are happy to accept and you are able to pay. Because these loans are unsecured, they will often have a higher interest rate than regular cards because there is no collateral in the event you become unable to make the repayments and, if you have a bad credit rating, the lender is taking a risk by giving you this chance. By the same token, once you have paid off the consolidated debt on this credit card, it is a quick and easy way to improve your credit rating and lower your interest rate again.

Debt Consolidation Programs

Another type of debt consolidation program involves a secured loan, when you sign collateral over to the bank, providing them added security in case you have to stop making payments. Typically the collateral is deeds to a house or land, although some banks have been known to accept collateral on items such as art collections. These programs are better for people with significant debt that can't be consolidated into the smaller debt consolidation programs which credit cards can provide. Be aware that if you do take out a loan against your house or property, if you are unable to make your repayments and can't make an alternative arrangement with your lender, they will have the right to recover their money through the acquisition of your property and assets.

So, what's the Most IMPORTANT Thing to Know?

By far the most important thing to review when you look at debt consolidation is what your spending habits are to start with! Are you prone to impulse shopping? Can you save money by cooking more at home? Would you be better off finding a cheaper home to rent, or can you take in a boarder to help with household costs? If you can identify areas in your budget where you can save, and re-learn how you spend your money, you will be in a far better position to manage your debt. Debt consolidation is a way to fix debt, but learning how to manage your money and spending according to your income is a way to prevent falling into serious debt to start with. You would invest in a car to help you get from point A to B, wouldn't you? It might not have a physical presence, but investing in your education, especially in something like money management, is just as valuable a tool to have - and once you've learned how to do it, there are no running costs! Serious debt can be a scary thing and it often feels like it's something we can't overcome. Remember to keep your troubles in perspective. You are competent, and you are more than capable of taking control of your finances, working through your debt problems and, most importantly, learning from the experience. If you can make it through and remember how you got there, and how you got out again, you will have gained a valuable life lesson which will aid you in the years to come.