How to Eliminate Debt Burden with Debt Consolidation

Debt is a burden most consumers struggle with on a daily basis. The approach we take in dealing with this burden is what separates us as individuals. Choosing the correct way is a personal choice involving, among other things; family discussion, best interest rate research, and visitation with a debt management or debt consolidation professional.

There are two distinct ways to deal with consumer debt.

12 Steps to Eliminate Debt Forever!: Become debt free using your current income by changing your Mind, Habits, and Spending by Sharman, G. Lawson Give you principles, concepts, information, and tips that you can immediately apply in order to obtain financial freedom. You too can be among the thousands of people that Sharman has helped to realize their dream of living without debt.

First, you may want to consider reducing the principal balance on a current loan, or even take this step with multiple loans. Paying a bit more than the minimum required and having that amount applied to the principal is one small way to reduce debt in the long run. It may be wise to look into the specific loans you have, take a close look at your budget, then see if there are ways to reduce the amounts owed on the various loans.

Another very popular option is debt consolidation. With debt consolidation, you can reduce your monthly payments by placing several loans under one all-purpose consolidation loan agreement with one lender. In addition to simplifying expenses and optimizing your budget, reducing your payment can help your overall credit profile, since debt burden is measured by comparing your loan payment as a percentage in relation to your total income.

• Debt Consolidation Specialists
  Once you decide you want to consolidate your bills, the next step to take is to find a good debt consolidation specialist. It is hard to struggle under debt but you may find that getting a consolidation specialist can be a little harder...

Debt (the amount of money owed to a bank, credit union or individual lender) is composed of just a few pieces. Simply put, debt is calculated by the amount borrowed, plus the interest charged for the privilege of borrowing said money, and usually some final additional administration and bookkeeping charges.

Tip: Be sure to include changes in interest and additional finance charges when figuring the cost of new loans and/or consolidation loans. When considering debt consolidation in any situation it is best to also understand the difference between secured debt, such as home mortgage loans, and unsecured debt, such as credit card bills.

• Professional Assistance To Shrink Your Debts
  These companies and professionals are popping up everywhere and claim to be non-profit bodies. Let them check your papers and weigh your debt status to overcome the situation with proper debt consolidation loans...

With the original loans or a consolidation loan, if you are able to make the payments and don't have trouble with late-payment penalties, you are managing your debt fairly well. But if you miss payments, the lender will have to take some action. It is at this point that the difference between a secured loan and an unsecured loan can be crucial. With a secured loan, the lender may be able to take your property if you don't keep up with payments according to the agreement. Most lenders are willing to work with you if they believe you're acting in good faith. A lender may even be willing to reduce or suspend your payments for a short time.

When you resume regular payments, though, you may have to pay an additional amount toward the past due total to get back on track. If you have unsecured loans, your credit rating will suffer and you will not be able to get future credit or loans easily. But, since there is no collateral to take, the debt may be discharged if your financial problems lead to bankruptcy.

This certainly does not mean that unsecured debt is the best way to go. In fact, to get unsecured personal loans you will have to have an extremely good credit history and, generally, proof of sufficient income. Making the choice between a secured loan and an unsecured loan depends entirely on the individual situation and be considered carefully.

There are other bumps in the debt consolidation road that can cause trouble if they are not understood from the beginning. The existence of several loans with high interest rates may lead you to think that debt consolidation is an easy answer. But keep in mind that lenders offering debt consolidation may charge high interest rates and significant late-payment penalties for those who already have trouble keeping up with current payments. (This may be necessary precisely because consolidators are working with problem borrowers.)

With one high interest rate rather than two or three your monthly payment is lower but, in the long run, you pay more in total. One of the key reasons for consolidating debt in recent years has been the rise in credit card debt, which often comes with interest rates that are considerably higher than with other loans, mortgages etc. People can build credit card debt because they spend more than their income, buying luxury items (or even things they feel are necessary), hoping to be able to pay off the amount borrowed with future earnings. Debt consolidation can help in many cases, though a change in spending habits is advisable so that new credit card debt is avoided in the future. In fact, almost every reputable debt management counselor will advise treating the real cause of debt problems; the lax underlying spending and saving habits of its customers.

To most of these professionals, debt is a symptom of other problems that must first be addressed. If you have built up a lot of credit card debt or your particular situation has made it necessary to get two or more loans (and you want to simplify things with one monthly payment), personal property such as a home or car may allow you to get a lower interest rate. Using a home or other valuable property as collateral allows you to work with a bank or other lender to get a secured loan.

In some cases, 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. Because the property is a "guarantee" for the loan, the lender may offer a lower interest rate, more agreeable payment schedule and fewer extra fees and charges. (However, keep in mind the difference between secured and unsecured loans.)

Any debt consolidation plan, whether it is a home equity loan, unsecured loan with a credit card company or even a personal loan, can add to debt problems rather than help solve these same problems. That is why it is very important to take time, from the beginning, to figure all the costs for the entire period of any loan. Debt consolidation can be the answer to financial problems, if it is managed properly in the correct situation.

How to Settle Your Debts by norman H. Perlmutter Step-by-step format it guides individuals, families and businesses through a process that will end debt and reverse insolvency without filing bankruptcy. Even if you're on the brink of financial ruin, with this book you can regain financial health and get a fresh start without committing "financial suicide".

Getting out of debt isn't easy, but you can do it, you just need a plan.

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Bankruptcy Alternatives Explained

There are many steps you can take in efforts to improve your credit, eliminate your debt, and avoid bankruptcy. Which should be the ultimate goal of all people, while bankruptcy is an excellent method of helping you clear up your debt, it should only be used as a last resort.

Bankruptcy remains on your credit for up to ten years and it could result in the inability to retain any other type of credit until it has been removed or several years has passed. On thing that a debtor can do, this is especially true if they have no income or assets, is to do nothing. Yes that is right nothing, if you have no assets or income that can be garnished bankruptcy would not benefit you in any way, your financial situation would not change as a result. It is likely that without anything of high value, credits would not attempt to take any court action against you because there would be nothing they could collect.

More Than One Way Out: Bankruptcy Consequences & Alternatives by Maryland Council on Economic Education & National Foundation for Credit Counseling, National Foundation for Credit Counseling & Gelb Strategies Bankruptcy offers benefits, but it also carries significant consequences. The decisions you make when facing financial difficulty will affect your life for many years to come, so it is important to approach the issue of personal bankruptcy with care...

Another step you could take is to undergo credit counseling, you would learn how to manage your money to reduce the debt. You could create a budget that contains your monthly income and expenses, thus reducing expenses. By doing this, any extra money you have could go towards reducing the debt you owe to creditors. You could also begin negotiation with your creditors, most of them realize that bankruptcy is a viable option for those who have more debt than they can handle.

For this reason, most will be willing to “take what they can get” rather than get nothing if the debtor files bankruptcy. This option requires that the debtor has income or assets that can be used in efforts to raise money to apply towards the debt you owe.

Additionally, this can allow you to rebuild your credit instead of applying a negative bankruptcy on it. Debt consolidation is another bankruptcy alternative that many could consider, by consolidating your debts into one low monthly payment you could easily reduce the amount of your debt, get the creditors off your back and avoid bankruptcy.

Finally, another option of avoiding bankruptcy is to make a formal proposal directly to your creditors. This proposal or also knows as a deal, will allow you to create a payment plan. It is all dependent upon what area of the world you live in and the laws surrounding the area of debt compromise.

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Avoid Bankruptcy

Avoid Bankruptcy: You May Have to Pay the Debt Back Anyway

The most widely held misconception about bankruptcy is that it’s the debtor’s version of the “get out of jail free” card in Monopoly. While most people know that bankruptcy affects your credit for 7 to 10 years, very few people know that it’s possible that you’ll have to pay back the debt anyway, even if you file a Chapter 7 “straight” bankruptcy. The formal definition of bankruptcy is “a proceeding in federal court in which an insolvent debtor’s assets are liquidated and the debtor is relieved of further liability.” On the other hand, the commonplace definition of bankruptcy is probably “the process of completely wiping out your debts for free.” In some cases, the latter definition may be appropriate, but in a good number of scenarios, it’s likely that even with bankruptcy, you’ll still have to pay back at least a portion of the debt.

How To File Bankruptcy / How To Avoid It by Edward A. Haman Clearly explains the major changes that have recently been made to the nation's bankruptcy laws. Specific changes will prevent people from eliminating credit card debt and other unsecured loans by filing for bankruptcy under Chapter 7, and forcing them to file under Chapter 13, a court-supervised repayment plan.

So when is it likely that you’ll have to pay back your debts? Here are the most common scenarios when you’ll get all the negatives of filing bankruptcy (severe credit impact for 7 to 10 years), but none of the benefits (you’ll still have to pay back at least part of the debt):

Avoid bankruptcy if you make more than the average person in your state
You make more than the average person in your state. If this is the case, then it’s likely that you’ll be forced into a Chapter 13 bankruptcy plan. In a Chapter 13 bankruptcy, the court orders that you pay all your disposable income to a court appointed trustee, who in turn disburses payments to your creditors. Keep in mind that the court determines your disposable income by national and county statistics on average necessary expenses, not what you’re paying. So just because you’re paying a lot for a car doesn’t mean the court will approve it. There are numerous cases when a judge ordered families to stop sending their children to private schools so they can have more money to pay back their creditors. Moreover, if you miss even one payment, the court may consider you to be in contempt and force you to pay the full debt amount back. Chapter 13 bankruptcy is so stringent that only about one third of all cases are ever completed. Check out the census bureau for more information about your state’s median income, and remember, if you make more than the average person in your state, you should consider avoiding bankruptcy.

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Avoid bankruptcy if you have assets
If you own a home or car, then it’s possible that the bankruptcy court will force you to sell them to generate sufficient cash to pay back your creditors. Chances are if have a good chunk of change invested (unless it’s in a tax-exempt account like an IRA) then you’ll also be forced to liquidate it. If you have a second home or another vehicle (assuming you own both completely), then you’re really out of luck. Fortunately, there are some safeguards to protect consumers from bankruptcy. In Illinois, for example, every resident is entitled to at least $7,500 of the value of their home, $1200 of the value of their vehicle, and $2,000 for anything that they want (known as the wildcard exemption). Also, these values double if you’re married (assuming the property is in both of your names).
What does this actually mean? Consider the following example.

Let’s say you have a house that’s worth $250,000, and it’s in both yours and your wife’s name. You still owe about $200,000 on your mortgage, and you decided to file Chapter 7 bankruptcy. In this example, you would be forced to sell your home, and with the proceeds you would pay back the mortgage company what you owe on the outstanding balance of the loan ($200,000), you’d pay yourself the Illinois real estate exemption ($15,000), and then you’d pay back your other creditors whatever was left ($250K-200K-15K=$35,000). If this is the case, then you should try to avoid bankruptcy.

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  Out of ignorance or stupidity, more and more people seem to be using bankruptcy as a first option, instead of a last resort. Before you do it, make sure you've considered every alternative.

Avoid bankruptcy if your creditors can prove you were fraudulent
If your creditors can prove that you were fraudulent and never had any intention of paying them back, then you should avoid bankruptcy. Chances are you’ll end up with a bankruptcy filing on your credit report, and you will still owe the debt.

For the majority of us it means that unless a) you don’t have a lot of equity in any of your property, b) you don’t have any investments like stocks, real estate, etc., c) you don’t care about having to sell anything mentioned in points a and b, d) you don’t care about having to give up your disposable for 5 years in a Chapter 13, and/or e) you don’t mind having your credit severely impacted for 7 to 10 years, then you may want to avoid bankruptcy.

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Do You Want To Consolidate Credit Card Debt Into Loan Payments?

With the average household debt increasing year by year it is not surprising that there are more people looking to consolidate credit card debt into loan payments each month instead. This is more than understandable as to pay off the average household debt paying the minimum payment each month would take 30 years.

Credit Card & Debt Management: A Step-By-Step How-To Guide for Organizing Debt & Saving Money on Interest Payments by Scott Bilker If you ask single Americans in their 20s or early 30s what their biggest financial worry is, most will probably answer credit card debt. Bilker shows them the formulas for digging out of the credit-card hole--methodically, systematically, and with a minimum of confusion. Surprises abound, including Bilker's advice against cutting up one's credit cards--after all, one may need that credit line in case of emergency. He also advises against paying off one's credit debt with savings, opting instead to use budgeting from salary and letting that savings grow untouched. If used correctly, this book could be a big help to those experiencing a rather common burden.

The 30 year number isn't one that I just pulled off the top of my head it is fact. Fact that if you continue to pay off that minimum amount each month and don't use your card you could end up spending a large chunk of your life putting expensive meals on credit card company shareholders tables!

By taking the decision to consolidate credit card debt into loan payments you are better off and in a stronger financial situation straight away. How do I know this, well the period of a loan is just that it is the length of time it takes you to pay off the money you borrowed. So if you borrow the money over 5 years then that is how long it takes you to pay it back!

So how do you consolidate credit card debt into loan payments? Well this is pretty simple as well. You need to shop around a little to ensure you get what you are looking for, there is nothing worse than signing an agreement to discover that you are stuck with something you didn't want for the next 5 years (or longer depending on the loan). So shop for a loan, get quotes from different companies then make your decision from there.

Important note to remember is that you are in the driving seat take your time don't be talked into signing something there and then at that moment in time. If you are a sucker for a sales pitch and need to avoid pushy people telling you how much better off you will be if you take out THEIR loan then get the quotes online!

Try not to use an agent to get the loan. They will put a percentage on the arrangement fee and you will have to pay it back, try and go direct to the loan company where you can.

Take your time, I know that if people are pushing you for payments then you need to get them off your case but if you rush you might again end up with something that you do not need or want!

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Reasons to Consider Debt Consolidation

You have several options when it comes to eliminating and rising above the debt that has taken over your life. One of the best options is debt consolidation. In this article, we will discuss the top ten reasons you should consider debt consolidation over any other form of debt relief method available.

How to Destroy Your Debts by Samuel Blankson Esential book to acquire first, before reading "The Practical Guide To Total Financial Freedom" series. It contains the technique for clearing your mortgage within the next 7 years amongst many others. If you read and apply this book, you will clear your debts and start living life without the burden of loans, mortgages or bailiffs.

Reason to Consolidate Your Debt #1 – Lower Your Interest Rates
One of the best things about debt consolidation is that more often than not, you will have the opportunity to lower your rates of interest. Instead of several different interest rates, you will obtain one interest rate, that is far lower than the many combined. Typically, when you consolidate your debt, you keep that same interest rate as well. It does not tend to fluctuate as your original debt interest rates may.

Reason to Consolidate Your Debt #2 – Lower Your Stress Levels
Debt can cause a great deal of various feelings, afflictions, and this can be on both a personal and mental level. When debt begins to take control of your life, instead of the other way around, many things can happen, such as:

• Depression
• Anger
• Stress
• Health Issues
• Arguments
• Problems At Work
• Lack of Concentration
• Sleeplessness

Debt consolidation allows you to focus more on your life than your debt.

Reason to Consolidate Your Debt #3 – Improve Your Life
When you consolidate your debt, you are taking the necessary steps to improve your life overall. You will find that your health is better, your relationship are better, you feel better, and best of all, your credit starts to improve, and more doors will open for you. When you are making an effort to get yourself out of debt, more people are willing to give you a chance. Therefore, you may be able to finally purchase that home you have been wanting or even find a better place to live, within your means of course.

Reason to Consolidate Your Debt #4 – One Payment
Perhaps the reason debt is so stressful and hard to manage is because of the various different payments that you must make each month. These payments are generally different dollar amounts, due on different days, and this alone can be enough to throw you for a loop. With debt consolidation, you have the opportunity to combine all of your payments into one easy to manage, easy to remember, and affordable payment.

One payment is so much easier to handle each month, than many payments. You will find that when you start making these payments on time, every month, life just because easier and more importantly stress-free.

Reason to Consolidate Your Debt #5 – Learn From Your Mistakes
Many debt consolidation programs offer a variety of other services as well, such as debt counseling, budgeting, and financial management. Once you have consolidated, it may be a wise decision to take advantage of these other services; they are typically free. You can then start on the road to a new, debt free, and financially stable lifestyle.

We all make mistakes, learning from them and knowing how to manage your finances properly, is the best way to ensure that you never become submersed in debt again. Again, debt is a part of every day life, knowing how to manage it and living within your means can be one very positive benefit of debt consolidation.

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8 Ways In Which Debt Consolidation Will Steer You Away From Bankruptcy

Life is strange because as money flows in it quickly flows out. And in juggling finances along with what seem to be great enticements to spend taking a loan, many US citizens find themselves in the sad predicament of bankruptcy.

Intelligent planning and prudent living are ideal but n case there are problems you need not despair there are ways in which you can consolidate debt and steer clear of bankruptcy.

1. There are “non profit consumer credit counseling societies” that help people plan their debt consolidation steps. Experts who work here will help plan a way out of debt and address issues like waiver of late fees and lowered interest rates. They show people how to deal with creditors and plan their finances.
2. Take a home equity loan and club all outstanding debts together in one loan. Of course for this you need to own property against which you can borrow. The financial institution or bank will require your home or property as collateral. In this case you must negotiate for the optimal monthly payments. Be sure to do a comparative study and find the lowest rate. Use sites like Bankrate.com’s home equity search engine.
3. Think personal loan. Is there a family member or friend who will trust you and loan you money to tide over the financial crunch. In this case since personal relationships are involved it is important to ensure that you put everything in writing and never take a personal loan for granted. Be sure to pay it back first.
4. Life Insurance policies are another source of funds. You can opt to pay it back or have the loan or withdrawal amount adjusted against the maturity value of the policy. The interests on insurance policy loans are often lower than credit card interest rates.
5. If you have put in long years of service then consider using a loan from your retirement fund to slip away from debt. This will help lower monthly payments and quicken the debt repayment process.
6. Many credit unions lend money and the interest rate is considerably lower and all you need to do to qualify for a loan is to be a member and pay annual fees. Credit unions lend members money for weddings, home loans, illnesses, and other emergencies. Most large organizations have a credit union in place.
7. Consider transferring credit card balances to cards that are offering 0% or low interest rates for limited periods. This is useful only if you can pay off the transferred amounts before the offer period ends.
8. Consider selling assets and settling all debts. Sometimes for peace of mind it is the easiest thing to do. But this step should only be considered when all others fail.

Debt causes illnesses, break up of families, fights, and unhappiness. It is in many ways the demon of the modern world. To stay away from debt you need to learn about handling finances from a young age. And, understand that “nothing in life is for free.” Know what the hidden facets of attractive loans and credit cards are. Read in between lines in advertisements promoting dream lifestyles. Plan your finances, the key is to set aside at least 15-25 percent of earnings for emergencies and budget how the rest of the income is to be spent.

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Understanding Consumer Debt Consolidation

If you are facing what seems to be an impossible financial situation due to staggering credit card debt, it may be time to get some help. One of the first options you should consider is a company that specializes in consumer debt consolidation. You will be able to consolidate almost all your unsecured debt so that when you visit the mailbox you will no longer have dozens of statements stamped "Past Due" or "Open Immediately".

How to Destroy Your Debts by Samuel Blankson Contains the technique for clearing your mortgage within the next 7 years amongst many others. If you read and apply this book, you will clear your debts and start living life without the burden of loans, mortgages or bailiffs.

Having an enormous amount of debt can be very stressful. In fact many marriages and relationships end over financial reasons. Contacting a consumer debt consolidation specialist will help get the financial burdens you are carrying reduced quickly and using this option instead of declaring bankruptcy is always the best the way to go, if at all possible.

Who Can Benefit From Consumer Debt Consolidation Help?
Not every consumer will qualify for debt consolidation help. When you are calling for information, you need to have all your financial information on hand. For example, you need to have the most recent statement from every credit card that you owe money to. You will also need to provide information on your other debt like car loans, or mortgages. You will also need the last two or three paycheck stubs for each person listed on these debts so they can get a good idea of how much income is coming into the home.

If you have only $2000-$5000 of unsecured debt you will not qualify for help in the form of debt consolidation. If fact they may refer you to a credit counseling organization to help you learn how to manage your money properly. If however, you have anywhere from $10,000 and above in unsecured debt plus a mortgage payment, a car loan and you are getting to that 30 days late area, you can definitely benefit from consumer debt consolidation advice.

Do I Qualify for Consumer Debt Consolidation Help?
Most companies require that you can show steady proof of employment before they will help you. You must have a substantial amount of unsecured debt. Some examples of unsecured debt are major credit cards, like Visa or MasterCard, gas cards, hospital bills, department credit cards, old utility bills, and outstanding repossession loans. Debts that will not qualify for consolidation are secured loans like your home mortgage, car loans, or boat loans. This type of debt is secured by collateral so it does not qualify.

What Can Debt Consolidation Due For Me?
Once you have spoken to a consumer debt consolidation specialist and have been approved, what they will do is work with you and get you one larger loan. They will use this loan to pay off all the creditors that you owe money too. When you are accepted into this payment policy almost every one of your creditors will require you to close your account. This keeps you from running up more debt as you are trying to fix the original problem.

Once you have your financial situation under control, you will see how much stress all those bills and late fees added to your life. You will no longer be a slave to debt, and will hopefully have learned how much more stress-free it is to live without the burden of high debt.

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Understanding Credit & Debt Consolidation

Debt consolidation involves transferring the balances from multiple accounts with relatively high interest rates to one account with lower interest. A debt consolidation loan does not reduce debt so much as restructure it in beneficial ways.

Debts are either secured or unsecured. Secured debts are tied to a tangible asset like a car for a car loan or a house for a mortgage. If a borrower stops making payments, lenders can repossess the car or foreclose on the house. Unsecured debts are not tied to an asset. The most common types include credit cards, medical bills and signature loans.

Debt and Credit
Most people get into debt difficulties because credit is easy to get and hard to control. Here are some warning signs that debt may be getting out of hand:

• you can only make the minimum payments on your loans and other debts each month.
• you apply for new credit cards to pay off old ones, thus rotating, but not retiring, your debt.
• you are near the limit on all your cards and accounts.
• you are being denied new loans because of your bad credit history.
• you have had to resort to bad credit financing.

The rule of thumb when using credit is known as the 20/10 Rule: Don’t borrow more than 20% of your annual net income and don’t let your loan monthly payments get higher than 10% of your monthly net income. For example, if you take home $4,000 a month, your total payments on credit debt should be no higher than $400 (excluding your mortgage and second mortgage).

Learn more about other steps you can take, in addition to debt consolidation by visiting Bad Credit Second Mortgage Now

There, you can also get a free quote on a debt consolidation loan to see if it could be a step in the right direction for you.

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Consumer Debt Consolidation

Credit cards are a common problem of consumer debt woes. The nature of credit cards makes it highly convenient to accumulate more debt than you can pay off. It is easy to continue charging more than you are paying on credit cards. Even balance transfers can help you keep up with payments temporarily when they are higher than you can afford monthly.

Eventually, something has to give. Consumer debt consolidation is one way to seek help.

Managing Debt For Dummies by John Ventura,Mary Reed Practical, commonsense guide provides straightforward strategies for coping with every kind of secured and unsecured debt, including, personal loans, car loans, mortgages, home equity loans, lines of credit, credit cards, finance company loans, and student loans.

Debt consolidation can mean several different things. One common type of consumer debt consolidation is a debt consolidation loan. These loans are not usually easy to obtain unless you have good credit. However, many who struggle with debt have had problems paying their payments on time which has hurt their credit. The lending institution will counteract the risk they acquire from giving you a loan by charging you a high interest rate. This rate may or may not be better than the original on your accounts.

Another type of consumer debt consolidation is a debt management plan. Debt management plans allow you to pay your accounts in one easy payment each month. The debt management company will then take that money and apply it to each of your accounts in the designated amounts. You benefit by having the accountability to pay off the accounts as well as in the reduction of fees on those accounts. In most cases, a debt management plan allows for the paying off of debt in five years or less. As you make each payment, you will start to see the balances reduce in a steady manner.

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After you have decided to go with a debt management plan, you will want to find a company that is in good standing with the Better Business Bureau. There are many nonprofit organizations that offer this type of debt consolidation as well that you can look into. Make sure to get any questions you may have answered before you agree to the plan.

Once you are on your way to paying off your debts, you can work towards financial independence. Ask your credit or financial counselor how you can take the first step to becoming debt free.

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Moving On When You Have Debt

Many of us have gotten into debt at one time or another. Some have paid it off or some are still carrying it in forms of credit card debt, a mortgage, home equity line of credit, or student loan debt. Carrying this debt can saddle your finances and put the rest of your financial life on hold. There are many reasons why you got into debt. Perhaps you didn’t have any savings, or you lived beyond your means or an emergency came up and you weren’t prepared. Don’t let your debt be the obstacle on your path to financial freedom. Regardless of the situation you are in, you need to change your financial habits and your approach to money.

While you will focus on paying your debt down with the majority of your extra money, you can start a savings account at the same time. There are differing thoughts to this approach, but seeing a savings account grow can truly install a sense of financial hope and motivate you to remain on a financially healthy path. At this time, recall why you got into debt in the first place. One reason might have been that an unexpected expense arose and you weren’t prepared. Having a savings account could have rescued you in that situation.

Making the savings account automatic will help you get back on the path to financial freedom without even thinking about it! Setup a savings account that is linked to your checking account and have the money automatically deducted every month. You will be earning interest in your sleep. To figure out how much you should be saving, come up with a total dollar amount of extra money that you have to pay down debt. For example, if that amount is $500 per month, then you could take $25 or $50 and use it for savings. Most of your extra cash flow will still be used to pay down your debt.

Consolidating your debt to one or two places will make this process much easier. You should also have a debt repayment plan. The practical goal is to pay down your debt as fast as possible. However, for this to happen you need to change how you think about your money. Having a savings account can be instrumental in motivating you to reach this goal.

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A Closer Look At The Differences Between Debt Reduction and Credit Card Consolidation

If you have experienced a loss of job or an injury it is very easy to become over loaded in debt. This is something that happens to people everyday. They get hurt, get laid off, or go through a divorce and end up using credit cards to make up for the cash they don't have and end up in debt that they find hard to get out of. Using credit cards like they were cash is not a wise solution and with the high interest rates they charge you will find it difficult to get them paid back. If you have found yourself in this situation then this article will give you some help on getting out, if you aren't there yet, maybe it will prevent it from happening to you.

As I said above it is never a good idea to use credit cards to get through tough times or even as your own form of debt reduction. The high rates will just take you deeper into the abyss of debt and make it harder for you to get out. For most people that file bankruptcy or looking for help with debt consolidation it is credit card debt that caused the problem.

If you are in a program of debt reduction, self imposed or otherwise, you need to concentrate on figuring out ways to lower your cash outflow and the amount of bills you have to pay. Credit cards will do the exact opposite; they will increase your bills and make it even harder.

Here's an example that we can look at: If a family has bills including their mortgage, insurance, car notes, and other miscellaneous expenses that adds up to over $2300 per month is there any possible way to reduce this? There are a number of ways that one could look into to accomplish this, one way is to look into a mortgage refinance that will help us refinance the home mortgage and bring the other bills into it for one low payment. One of the advantages of doing this is that the mortgage loans are typically lower interest and in many cases may be written off on taxes.

If you take the time to look around you will find loans that will give you cash back, loans that you can take out against the equity in your home, loans like the one above that will allow you to combine everything into one low payment, and many other options.

Just about any debt you owe can be rolled into one payment or at least combined and reduced but anything like utilities, cable, cell phone bills and the like will have to be paid separately. You may be surprised at how much you will be able to reduce your monthly payments with a debt consolidation loan.

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