Debt Consolidation Tips |
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Refinance Your Home
Be careful with this one. When you venture into the realm of paying off unsecured debt with secured debt, you’re playing with fire. You need to ask yourself if you’re really fixing a one-time problem, or if you have bigger problems with spending money and you’re just going to dig yourself another hole, right next to the first one. This option for making yourself your own best debt consolidation company requires that you have some equity built up in your home. You’re basically borrowing money against the value of your home and paying off your current mortgage, using the remaining equity for debt consolidation. The only problem is, you’ve just cashed out on your single largest investment and started over. It may make sense if you really analyze it, though.
Debt Consolidation By Home Equity Loan
This is really very closely relate to the option described above, except you don’t throw away your existing mortgage to consolidate your debt. You simply call the bank and ask them for a loan against the difference between the market value of your home and what you currently owe on it. If your house is appraised at $150,000 and you have a balance left on your mortgage of $75,000, you can probably borrow $25k - $50k against the difference. The key here is to use the money for debit consolidation, and not to make your problems bigger. Again, this option involves transferring unsecured debt into secured debt which is always a risky operation if you have a spending problem.
So you can see there are lots of options outside of using a debt consolidation company. But don’t let that dissuade you from contacting one or two of them and seeing what they have to offer. Just keep your eyes and ears open for the warning signs that they’re trying to take you for a ride, and understand that you have options.
Debt Consolidation Tips |
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Debt Negotiation
Especially if you’re current on all your accounts, you have the ability to negotiate with your creditors. They don’t want you to fall behind any more than you want to, and they’re generally willing to help out if it will keep everyone out of trouble. If you’ve already fallen behind and are in dire straights you have a somewhat different power. You can honestly offer them a take it or leave it deal. That goes something like this: “I owe a lot of people a lot of money. If you want to see any more payments, you’re going to give me a 0% interest rate and my payment will be $50 a month until I get back on my feet. Other than that, I can’t promise you anything, and I’ve got a long list of creditors to call yet today. Someone will like the deal.” Seriously, it works.
Consolidate Debt With Unsecured Loans
Providing you’re not already in the proverbial bad credit sewer, you can get a personal loan on your own recognizance and consolidate your own debt. You’ll be your own best debt consolidation company. Sure, because it’s unsecured your interest rate won’t be ideal, but chances are it will be better than some of the nasty department store credit card debt you have out there. It only takes a few phone calls to find out, and what do you have to lose?
Ditch Your Car
I know it’s hard. Today more than any other time in history vehicles are associated with status. I can’t count the number of times I’ve heard some idiot say “They make a lot of money - they drive an H3″. Let me tell you, from the bottom of my heart, anyone who associates wealth with nice vehicles is a fool. Vehicles are black holes for money, and unless you can afford to pay cash or less than 3 years on a loan you shouldn’t be driving it. If you are, get rid of it and buy something you can afford. Rich people don’t drive expensive cars. People who want to look rich drive expensive cars.
Debt Consolidation Company Selection |
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So here we are in the next article, and we’re going to talk about three things that should set off red flags in your head that you’re getting taken for a debt consolidation ride. These aren’t the only things you should watch out for, but they’re certainly a good indicator of if you’re dealing with the best debt consolidation company or not.
First, let’s look at interest rates and payment terms. If the person on the other end of the phone is promising you a lower payment, but at a higher interest rate, tell them thanks but no thanks. This is a guaranteed formula for paying more money on your debt over a longer period of time. You’ll end up paying a huge “tax” on your debt to get it into a payment range you can afford. This is NOT in your best interest.
Second, if they tell you that they’re going to negotiate all your debt away so you can pay it off in a reasonable amount of time, they’re lying. You can do this yourself, and you don’t need their help to do so. You are more than qualified to call up your creditors and give them the hard line, especially before you get into trouble. Creditors want their money, and they want you to do what you say you’re going to. It’s pretty simple.
Last, if the company starts talking to you about utilizing 0% interest credit card balance features, hang up the phone. This type of strategy can get you by for a short time, but it will catch up with you, and it doesn’t do anything for your credit rating. Be very careful when transferring balances around, and make sure that the account you’re transferring from is close, and annotated as such.