Personal finance tips and advice on money and investing to increase your financial intelligence and welfare

Debt Consolidation Made Simple

These days there are more and more people falling deeper into debt, but there are several ways to try and remedy this situation. One of the more common solutions for this mess is to apply for a consolidation loan. If you are experiencing debt issues right now and are thinking about applying for a consolidation loan, please read on and see if it is the right fit for you.

License: Creative Commons image source

License: Creative Commons image source

The Adverts

You have seen the many adverts stating that you can become debt free and lower your interest rates with just a phone call. These seem too good to be true, especially when you are feeling vulnerable and are unable to make your latest credit card payments. Not all debt consolidation companies are quite so frugal with the truth, thankfully. The debt consolidation business offers you a loan, based on your property, and will usually be used to wipe out your existing debts. These are non-secured debts, and in return you are adding debt to your existing mortgage total. When you speak to the financial advisers who work for these companies, they should be candid enough to explain the whole process.

Too Good To Be True?

Debt consolidation loans are not for everybody, but they may be helpful depending on your circumstances. If your home has a large amount of equity available, and you are really struggling to meet the credit card or personal loan repayments, you may be looking in the right direction. Once you fall behind with these bills, you risk all kinds of stress related backlashes. Nobody likes the idea of a debt collector visiting you at work, or hammering on your door in the evening. But these people exist and will have no issues about letting you and your friends know about your financial issues. Before you consider the debt consolidation, you need to weigh up the options.

Do The Sums

If you are feeling the pinch on a regular basis, like every month, you should do an income and expenditure report. This simply looks at your income against what you spend every month. You will soon see if you have a serious problem. If you are always broke and tend to pay your bills on the late side, you should seek some help.

Consolidation Facts

When you borrow money from a debt consolidation firm, you are replacing your current loan with a larger one. That is a fact that has to be understood before you take any further action. But overall you may benefit from this situation as the repayment amount will be much lower for a start. Look at the total amount that you will repay and you may be shocked. But if that is negligible compared to the stress that you are currently undergoing, and then it may be time to speak to the consolidation company. Just ensure that you have explored other options and you are happy with your choice. The debt consolidation company will explain the whole procedure and should not try to push you into making this important decision.

About the Author: When not obsessing over football, Jeff Hardy likes to keep up with the latest happenings in the world of finance. He works at Loan Saver Network, a company that provides a range of bad credit home loan and debt consolidation home loan solutions. In his free time, he likes to blog about the same.