Debt Consolidation Advice - The Greatest Tip For Clearing Debt There Is.
Debt consolidation. Taking all your debts and putting them into one loan - consolidating and reducing the monthly premiums in an attempt to pay everything off whilst still being able to afford to live!
But - what if there was an alternative? Would debt consolidation through a consolidation company actually be the best thing to do? I mean, won't they also be charging you a fee for doing this? So you end up paying back more over a longer period of time.
Doesn't actually sound right, does it!
How about this instead.
Consolidate the loans yourself and reduce your debt through your own management of money. (After all, the only thng the consolidation company does is to negotiate with your debt holders anyway.)
So, do it yourself.
First, sit down and work out exactly all of your debt - you can't solve 100% of a problem unless you know 100% what the problem is. So sit down with a pad and pen and write down all your debts - cards, loans, overdrafts, etc. Make sure you list out everything.
What you need to do now is work down the list and put the debts into order. Don't do biggest to smallest - that's not what we should be looking at. What you need to know is which debts are the most important and would have th eworst effect if you were to fall into arrears? Obviously, you want to make sure that any loans or debts associated to your home are high on the list of importance - discounting your mortgage of course. We'd all love to but paying that one off quickly is not most important for this list.
Now that you have the debts listed out in order of importance, which ones can you discuss with their respective companies? Can you talk direct to them and agree a repayment plan that reduces your monthly charge but doesn't result in you being given a poor credit rating? Even if they agree to extend the amount of time you need to repay the total in, that's a start and gives you some leverage.
What you need to try and arrange is some leeway that allows you to A) live sensibly still whilst B) targetting debts one by one for special treatment. (Although you'll be carrying on paying your monthly repayments to all your cards, debts etc, you need to target and concentrate your efforts.)
By special treatment, I mean concentration. Lets say you have the following debts - Visa card, Mastercard, Store card. The store cards will probably have the lowest amount of debt - but they will likely be charging you the highest rate of interest every month.
Now, let's say you pay $50 a month in repayments on your store card. If you take any spare cash you have left at the end of the month, however small an amount it may be and add that to the amount that you repay monthly, you will reduce that specific debt faster. Not only do you pay it off faster, you'll also reduce the amount of interest you pay over the life of the debt.
Once you have cleared the store card debt, don't spend that money. Take that money and add it to the next card in the pecking order. This increases the amount being cleared on this card, reduces total interest and reduces your debt faster.
Follow this method until al your debt is gone. It's a great feeling to clear your debt by yourself without taking out a loan and, more importantly - it's cheaper too!
For more great debt consolidation advice check out http://www.debt-consolidation-advice.us/
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