Saturday, August 7, 2010
Tuesday, June 22, 2010
Understanding Debt Consolidation
The adverts can be seen everywhere. In fact, debt consolidation ads are as popular as weight loss ads. Despite these claims, does it really offer any benefits for you? In this article we shall be looking at how debt consolidation actually works ,and how to know if you really need it.
Actually debt consolidation requires you to get a new and fresh loan altogether to pay off all your other loans. If you go about it the wrong way, you may wind up in worse financial situation than you were before. Handling students loans, car loans and mortgages, and any other debts is tedious. If you can pull all those expenses together under a lower interest rate, like many ads boast, you will end up making lower payments. In addition, the idea of lumping several payments into one might appeal to you. Indeed, with this process, you are far less likely to forget to pay a bill. It seems like a win-win situation.
Do you really want to consolidate your debts?
The first thing to consider is creating a budget and understanding your finances. The following fundamental steps could be taken in order for you to create a budget:
1. List all of your incomes (including wages, investment income, etc.).
2. List all of your expenses (rent, loans, food, gas, etc.).
3. Enter the amount you receive or spend for each item over a fixed period of time (usually a month).
4. Set realistic limits for yourself to stop unnecessary spending.
5.Finally, always keep a record of your daily spending and monitor it over a period of one month. This should be done in order for you to cut out excessive and unnecessary spending.
By comparing how much you make and spend each month, you can get a better understanding of what effect loan payments have on your life and whether it's worth it to consolidate. For you to know that you need to consolidate your debts, there are telltale signs to watch out for.
These signs include but not limited:
1.Consistently making late payments.
2.Paying only the minimum amount due on credit card bills.
3.Borrowing money to pay for expenses like food and gas.
4.Using more than 20% of your paycheck to pay debts (excluding mortgage).
When you find yourself doing the aforementioned things continuously then you qualify to go for consolidation.
Joseph Okonkwo is an online author who likes writing on hot and relevant issues around the net and enjoys patronage from online users.
Today he shares some insights on debt consolidation at: www.fastdebtconsolidation.co.cc
Actually debt consolidation requires you to get a new and fresh loan altogether to pay off all your other loans. If you go about it the wrong way, you may wind up in worse financial situation than you were before. Handling students loans, car loans and mortgages, and any other debts is tedious. If you can pull all those expenses together under a lower interest rate, like many ads boast, you will end up making lower payments. In addition, the idea of lumping several payments into one might appeal to you. Indeed, with this process, you are far less likely to forget to pay a bill. It seems like a win-win situation.
Do you really want to consolidate your debts?
The first thing to consider is creating a budget and understanding your finances. The following fundamental steps could be taken in order for you to create a budget:
1. List all of your incomes (including wages, investment income, etc.).
2. List all of your expenses (rent, loans, food, gas, etc.).
3. Enter the amount you receive or spend for each item over a fixed period of time (usually a month).
4. Set realistic limits for yourself to stop unnecessary spending.
5.Finally, always keep a record of your daily spending and monitor it over a period of one month. This should be done in order for you to cut out excessive and unnecessary spending.
By comparing how much you make and spend each month, you can get a better understanding of what effect loan payments have on your life and whether it's worth it to consolidate. For you to know that you need to consolidate your debts, there are telltale signs to watch out for.
These signs include but not limited:
1.Consistently making late payments.
2.Paying only the minimum amount due on credit card bills.
3.Borrowing money to pay for expenses like food and gas.
4.Using more than 20% of your paycheck to pay debts (excluding mortgage).
When you find yourself doing the aforementioned things continuously then you qualify to go for consolidation.
Joseph Okonkwo is an online author who likes writing on hot and relevant issues around the net and enjoys patronage from online users.
Today he shares some insights on debt consolidation at: www.fastdebtconsolidation.co.cc
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