| When it comes to debt consolidation some people | | | | on the late fees...what a racket! Don't get caught in |
| dream of day when all their bills will disappear. Next | | | | this little trap.Retirement LoansI'm not going to give a |
| to hitting the jackpot, a debt consolidation loan is | | | | lot of detail on this one because I think it is a bad |
| some times the only way out for a debtor. No more | | | | idea and only should be used to save you from |
| playing "pick the bill out of the hat" to see who gets | | | | bankruptcy. There are too many big negatives other |
| paid, all you have is one affordable check to write | | | | wise to consider this option for debt consolidation. |
| each month and pretty soon the balances quickly | | | | You loss your tax benefits and may have to pay a |
| disappear. WAKE UP! Come back to reality, it isn't | | | | penalty if this don't go smoothly for you. Not to |
| quite that easy, however if you do it right it works | | | | mention the big kicker that if you are borrowing |
| pretty well.Different Ways to ConsolidatePeople ask | | | | money from yourself that means your money is not |
| me "What's the best way to consolidate debt?" and | | | | working for you but against you. Not only that if you |
| of course "What's the catch?" Well, it just really | | | | lose your job or quit you most likely have to pay off |
| depends on the situation. There are all sorts of ways | | | | the loan immediately. After you learn a few things |
| to do it and some folks get really creative too. I'll tell | | | | about investing you will see quite clearly how this is |
| you about some of the more popular ones and the | | | | not such a great option even though it's the easiest |
| pros and cons you get with them.Just remember | | | | to get.Debt Consolidation LoansEven though they |
| because it looks good doesn't mean it is. The | | | | may seem to be the best choice or even the most |
| advertisers now a days are pretty good about | | | | logical, it still may not be your best bet. A debt |
| disguising those higher interest loans with payments | | | | consolidation loan is an unsecured personal loan, and |
| that go on forever because all you see is the lower | | | | they can be difficult to get if you already have a lot |
| payment. So try and ignore that sweet pitch for a | | | | of debt. The bank doesn't like to give you a loan if |
| lower payment if it means you just dug yourself a | | | | you monthly payment on your debt not counting |
| bigger hole and put yourself deeper in debt.First | | | | your mortgage is more than 15%-25%, depending on |
| things first. Let do a little wake up call. If you are just | | | | your credit, of your gross monthly income (before |
| barely trending water because you are in to much | | | | taxes). The bank feels like you are just going to go |
| debt, just realize that not all these options will work | | | | and charge back up your balances, which happens all |
| for you. And some times, no of them will. If that's | | | | too often. Because of those big negatives the going |
| you, keep your head up high and don't drown. Many | | | | interest rate on these types of loans are about 15% |
| people can really cut their debt without ever | | | | or more. These are definitely not the best interest |
| consolidating.And don't forget, if you do decide to | | | | rates compared to the other items we discussed so |
| get a debt consolidation loan, don't think the fairy | | | | far. However, if you can get a debt consolidation loan |
| god mother is going to make thing all better. After all, | | | | with an interest rate better than what you have right |
| once you do a debt consolidation you will still have to | | | | now it may be beneficial for you to get one.Consider |
| make a payment until that loan is paid off.Home | | | | a Debt Consolidation Loan if:You are willing to close |
| Equity LoansIf you have been paying on your home | | | | your credit card accounts so you don't end up in the |
| for a couple of years, put a pretty big down | | | | same trap everyone else does and dig a deeper hole |
| payment when you got it and are lucky enough to | | | | of debt.The interest rate you will be paying is lower |
| be in one of those areas of the country where the | | | | than what you are paying right now on any debts |
| home values shot through the roof, you may be | | | | that you would consolidate. Make sure the term is |
| sitting on little piece of freedom in the form of equity | | | | not more than 5 years or you could be falling into a |
| in your home. To | | | | different trap altogether and end up paying way to |
| get to this little nest egg you either have to sell | | | | much interest for the term of the loan.Don't use a |
| your home or borrow money against it. And so | | | | Debt Consolidation Loan if:the most obvious reason is |
| enters the home equity loan. Another little thought...If | | | | if the interest rate is way too high.The term of the |
| you still owe a considerable amount on your home, | | | | loan has been extended to 10 or 15 years. It will |
| IGNORE the ads for home equity loans for more | | | | show you a really cheap payment but wait until you |
| than the value of your home. Not only are they very | | | | add up all the money you will be paying back you |
| expensive but also very dangerous. And if you are | | | | won't consider it a good deal then.Counseling |
| still considering one of those loans Contact Me and I'll | | | | AgenciesAs the ads on late night TV and cable claim |
| be more than happy to give you a hundred thousand | | | | to be able to consolidate your debt i.e. "bills", into one |
| reasons not to.If you want to be a stickler about it | | | | small monthly payment "no matter what your credit |
| there are actually two different types of home | | | | history". Every once in a while you these ads are for |
| equity loans. The first, which is my favorite, is the | | | | a home equity loan, but more |
| home equity line of credit (HELOC), it uses the equity | | | | recently they have leaned to more often promoting |
| in you home like a credit card. You can use a little as | | | | credit counseling agencies.Counseling agencies go to |
| you want or up to your limit, and once you pay it | | | | the lender and negotiate a lower interest and/or fee. |
| down enough you can keep on doing it. It's very | | | | After that you end up making one monthly payment |
| useful when done correctly because most of them | | | | to the counseling agency, Which then pays your |
| have some sort of interest only option which will give | | | | creditors. Their fee is lumped into the monthly |
| you greater flexibility. Hence, that's why it's my | | | | payment. A lot of times you could have done much |
| favorite. And the other type is a fixed amount, rate | | | | better of for yourself if you would have dealt with |
| and term. Your payment stays the same all the time. | | | | the creditors personally. This is not really a debt |
| Just to make this simple when I talk about a home | | | | consolidation loan since you don't really refinance |
| equity loan it will refer to both of these types.Many | | | | anything, it more like debt restructuring. If you can |
| people use home equity loans for debt consolidation. | | | | stick with the program you can be out of debt in 3-5 |
| They will often get a pretty good interest rate, and | | | | years.The biggest fear people have when dealing |
| since you can deduct interest payments on their | | | | with the counseling agencies is that the agencies will |
| taxes, making the "real" cost even lower. But, of | | | | ruin their credit. Quite honestly if you are already |
| course there is a down side, you must use your | | | | behind on your bills and haven't been able to put a |
| home as collateral. Which is just a fancy term to say | | | | dent in them, a counseling agency debt consolidation |
| if you miss your payment I can take your house. | | | | program is not going to make your credit much |
| And There goes the roof over your | | | | worse than it already is. It will make your score drop |
| head...Literally!Consider a Home Equity Loan for Debt | | | | a bit, but when you look at the benefit of being debt |
| Consolidation if:You won't be leveraging your home | | | | free a few years down the line it's a lot better |
| so much that you are borrowing pretty close to, or | | | | alternative to declaring bankruptcy.Consider debt |
| more than, the current market value of your | | | | consolidation with a counseling agency if:You are |
| home.You can pay it back in 5 years or lessYou are | | | | falling way behind on your bills and there is not |
| in debt because of unusual circumstances, like an | | | | another alternative. These kinds of counseling |
| unexpected accident or hospital bill, but for the most | | | | programs are for people who are having problems |
| part you have excellent money management | | | | paying their bills on time, not for people who want a |
| skills.DON'T use a home equity loan for debt | | | | lower interest rate.Most of your debt is not a |
| consolidation if:You are going to have to borrow | | | | secured loan. In other words a car loan, home loan, |
| 100%-125% of your home's value. Interest rates are | | | | or a student loan. Since there is collateral involved the |
| high on these types of loans not to mention you will | | | | counseling agency has a harder time renegotiating the |
| be stuck in your house and won't be able to move | | | | terms.Don't do debt consolidation with a counseling |
| for any reason for a very, very long time.Your | | | | agency if:You know yourself better than anyone else |
| marriage is on the rocks. Separation and divorce may | | | | if you can't stick to a little program for a week or a |
| not make it possible for you to remain living there. | | | | few months by all means don't try and do this |
| Especially if you have a court order to move. Not to | | | | program that is going to take a few years to |
| mention you would loss a great deal of money if you | | | | complete.You haven't done you due diligence and |
| had to short sell it (You would still have to pay off | | | | thoroughly checked out the company. Since they are |
| the mortgage before you can sell it)Now if you think | | | | acting as a mediator and you are paying them they |
| that you are in debt because you just don't make | | | | can screw things up really quickly and you will still be |
| enough money...well, I am surprised you made it this | | | | held responsible (it really does happen check out the |
| far. With that type of thinking as soon as you pay | | | | news release section) Make sure you choose an |
| off your credit cards you will just find another | | | | agency that will give you the support you need for |
| excuse to charge them again, then your home will | | | | the long haul...3-5 years.Protect YourselfBe wary of |
| really be at risk.Credit CardsConsolidating your debt | | | | credit counseling organizations that:-charge high |
| on a credit card comes off as a pretty bad idea; | | | | up-front or monthly fees for enrolling in credit |
| however it can actually be a great resource if done | | | | counseling or a Debt Management Plan.-pressure you |
| correctly. Credit cards sometimes offer some of the | | | | to make "voluntary contributions," another name for |
| lowest interest rates around and they are easier to | | | | fees.-won't send you free information about the |
| acquire than most debt consolidation loans, but the | | | | services they provide without requiring you to |
| best part is that they don't require collateral like your | | | | provide personal financial information, such as credit |
| home equity line does. That is an important thing if a | | | | card account numbers, and balances. -try to enroll |
| bad situation pops up and catches you unprepared. | | | | you in a Debt Managment Program without spending |
| You can either call your current card company and | | | | time reviewing your financial situation.-offer to enroll |
| find out what their interest rates will be on a balance | | | | you in a Debt Managment Program without teaching |
| transfer to their card, or if you are like me you get | | | | you budgeting and money management skills. |
| tons of offers in the mail for companies offering to | | | | -demand that you make payments into a Debt |
| consolidate your debt onto a credit card you can | | | | Managment Program before your creditors have |
| choose the best one. A big warning here...READ THE | | | | accepted you into the program.Creative Alternatives |
| FINE PRINT! Make sure if you transfer the balance it | | | | to Debt ConsolidationNow it's time to start to use |
| will help you not hurt you. I give more tips on how to | | | | that space between your ears, your brain. Just |
| handle this in my FREE newsletter so make sure you | | | | because none of these options work for you doesn't |
| sign up.Consider using a credit card for debt | | | | mean that you should give up! You have made it this |
| consolidation if:You can get a lower interest rate; | | | | far.Borrow against the cash value of your life |
| make sure it is a fixed rate and not just a low intro | | | | insurance policy. If you've built up a cash value in your |
| rate, that's how they get you. Please Read The Fine | | | | policy, you should be able to tap it at a low rate. |
| Print.You never pay the minimum payment, and they | | | | Best of all, it doesn't have to be repaid. The |
| tease you with a really low one, and you pay as | | | | downside is that your loan will decrease your death |
| much as your budget will allow each month to get rid | | | | benefit, so make sure you have enough coverage to |
| of the debt quickly, after all that's what this is | | | | protect your heirs. (You may want to buy a |
| for.You close out the accounts that you are paying | | | | supplemental term policy.)Make it easy for yourself |
| off so that you don't go on a shopping spree. A | | | | call all your credit card companies and get them to |
| word of caution if you close too many account it will | | | | change the due dates that are more convenient for |
| hurt your credit score.Don't use a Credit card for | | | | you so they fall all on the same day right around |
| debt consolidation if:You can only get an interest rate | | | | payday. This way you sit down once or twice a |
| that is higher than what you have because you have | | | | month to do your bills instead of 10 different |
| bad, dinged, or a bruised credit history.You are just | | | | days.Think of Debt Consolidation as one of the many |
| so addicted to your credit card that you can't bear | | | | tools in you arsenal to get yourself debt free.Mical |
| the thought of getting rid of one or more of | | | | Johnson is affiliated with Rock Financial, Inc., a |
| them.You lack consistency in paying your bills on time. | | | | Licensed Correspondent Mortgage Lender, Florida |
| All those late fees start to add up pretty quick at | | | | Department of Finance. Mr. |
| $25-$30 a pop, and then you pay 18%-30% interest | | | | |