What about all those pesky credit card bills and small loans for furniture and such things? Some of those have 18% and higher interest. How do I get rid of all that? Debt consolidation. That is not the whole solution, but that gives you one bill instead of many bills. And hopefully you can get a lower overall interest rate so you save money in the long run.
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Debt consolidation can be from a number of unsecured loans into another unsecured loan or, more often, it is a secured loan against an asset that serves as collateral, most commonly a house or other property; in other words, a mortage. The collateralization of the loan allows a lower interest rate, because by collateralizing, the asset owner agrees to allow the foreclosure (forced sale) of the asset in order to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.
Debt consolidation is theoretically best when paying credit card debt. Credit cards usually have a much higher interest rate than even an unsecured loan from a bank. A secured loan will lower these rates dramatically, then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest. In reality, most peoples' credit card debt trouble is there because they spend more than their income. If that habit continues, the consolidation will not benefit them much because they will simply run up the balance again. Is that YOU?
One serious consideration you might have to look at is a second income. There are plenty of opportunities out there even if it is working at the local coffee shop. You could try your hand at things like or take surveys online.
If you are a property owner with a mortgage, you should consider your mortgage, especially if interest rates have dropped since you first received financing.
A debt consolidation company helps people, individuals or companies, get a grip on their finances by managing their payments and debt. They provide a modicum of relief from heavy interest that build up over the years. If you secure the services of a debt consolidation company, create a list of what you want them to do for you. Most important is they should do is provide you with a dedicated debt counsellor who will go over all your debt records. See if you can reduce your debt payments up to 50% or more with a Free Financial Evaluation!
Once you have your debt payment down to a manageable level, how do you keep it there? Some people advice you to destroy your credit cards (that is what I did) and that may be the best thing you can do for yourself if you have a serious lack of self-control. The better solution is to leave them at home or in a safe place such as a safety deposit box until you need them. Keep one with you for emergencies only.
The real secret to managing your debt and becoming debt free? Self-control. Make a budget, stick to it, and stop impulse buying. Live within your means not above them. Everyone knows these things but so few practice them. Take it from me, it works.