Getting Out of Debt - Solid Steps

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Debt Consolidation Or Personal Bankruptcy
As a licensed trustee in bankruptcy in Canada, I meet with many people who explain their debt problems to me, and then they ask me if they should get a debt consolidation loan, or go bankrupt.

I answer their question by explaining the differences between debt consolidation loans and personal bankruptcy. Obviously both alternatives are methods for dealing with debt, but they have very di... Read debt consolidation 1 article



How to Manage Debt and Depression
Many years ago life was bubbling along fine, I had 4 houses and 3 units, I had gotten over my divorce and I had changed direction from the previous job I had and was moving forward. Then something happened, Depression!

I started to feel fatigued, I didn't exercise much so I started to put on weight. I was not feeling happy about putting on weight so I started to eat more. I know it make... Read debt consolidation 1 article



Getting Out of Debt - Solid Steps
Are you in over your head? Do you need solid direction on what to do or where to turn? Are you in debt and the only way out appears to be bankruptcy? Do you want to avoid bankruptcy at all cost? If you answered "Yes" to any of the above questions then keep reading. I am going to give you some solid steps to getting out of debt that you can apply now and get out of debt while avoiding bankruptcy.

1st Step: Determine your necessities versus your luxuries. Make a list right now on a sheet of paper with the things that you have to have on the left side and things that you have convinced yourself that you had to have but instead are just luxuries on the right side. Let me help you with this one, the only things that should be on the left hand side of the paper are food, clothing, and shelter. Luxuries are things like cable TV, cell phone, 3rd vehicle when there are only two drivers. Now I know this is putting you into culture shock and you are probably fighting me on this one but we are trying to get you out of debt. If you are in debt then it is obvious that you can't afford all of the luxuries that you currently have.

2nd Step: Determine how much fat is in your budget. Fat, is excess money that is being spent on your luxuries.

3rd Step: Put that fat to work for you. The average person will find between $100 to $500 a month worth of fat. Use that money to start paying down your debt.

4th Step: Pay on the smallest debt first This goes against conventional wisdom that teaches to pay on the debt with the highest interest rate. Actually the name of the game is speed. You pay on the debt that you can pay off the quickest and this is almost always the smallest debt. So you will use the fat that you found in your budget and add that to the payment that you owe the least on. So for example if you owed $1,500 on a credit card and the monthly minimum payment (which is what most people pay) is $30. And you found $150 of fat in your monthly budget then you would pay $150(fat) plus $30(min payment you are already making) total of $180 on your next credit card bill. You would continue that until your bill is paid off.

5th: Just repeat with each debt. When the credit card bill is paid off just add the $180 each month to the next smallest debt. Continue this process each month. Continue this and you will be well on your way to getting out of debt.

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Debt Consolidation Loans - Facts Revealed

In simple words, debt consolidation can be defined as a type of loan with which you can condense all your debts into a single debt for which you make payments out on a low interest rate. You can get a debt consolidation loan irrespective of the type of outstanding loans - secured or unsecured. The bottom-line is reduced payments and saving money!

Debt consolidation offers you several benefits. First and foremost, it takes away the overhead and confusion of repaying several loans in a month. When your loans get consolidated into a single loan, the repayment process simplifies and becomes less cumbersome. Owing to debt consolidation, you end up saving a decent amount as you pay a lesser rate of interest on the loan. Debt consolidation also helps you bring in stability and the much-needed peace that you need for financial planning. Lenders cooperate because it assures them of at least partial repayment on the loans, though at a reduced rate of interest. Debt consolidation also has some drawbacks.

Though by consolidating your loans, you reduce your rate of interest, but the tenure of your loan can go up. This way by consolidating loans by choosing a long repayment period, you can end up paying a lot more than you initially borrowed. In this way, debt consolidation turns out to be a quite costly option. Another drawback is that the debt consolidation loans that are used to consolidate debts are secured on either property or other such assets.

The best way to get a smart deal to perform a great deal of market research before deciding which company you would want to assist you in your debt consolidation process. Financial experts advice that if you are in debt and are facing the severity of repaying them, as a first step you should stop borrowing more money. The next step should be to consolidate your debts using some sensible debt consolidation program to bring the life back on to the track.

In the booming economy, there are various debt consolidation programs that you can choose from. A consolidation program can be a paid program or it can be a free service. With the growing popularity of the Internet, you can also apply online for debt consolidation. There are several banks and financial firms that provide online advice and debt consolidation services. Once you decide on your debt consolidation company, the company will provide you with a financial analyst or an expert counselor to customize a debt consolidation program to suit your financial needs.

Once the program is in place, the debt consolidation company experts negotiate with your lending companies to get you a lower interest rate and thereby secure a lower monthly payment option. When an agreement is reached between the experts and the creditors, you start paying a consolidated periodic payment out to the debt relief company. The consolidators will divide your payment among your creditors.




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Getting Out of Debt - Solid Steps
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