How to Minimize your Debts
Debt consolidation sounds like a painful process but it is actually a way of making life easier for people who are struggling to keep on top of all their outstanding debts. Debt consolidation involves the reorganisation and payment of a number of smaller debts through the use of one large umbrella loan that will move all of your debt into one place. This might seem somewhat pointless to some people but it actually has a number of advantages, from cutting down the hassle and time spent dealing with the various people and companies you owe money to, as well as significantly cutting the size of the repayment amount that you would need to find every month to service your debts by organizing them into one lower interest loan payment.
There are many methods available to you if you do decide to go for debt consolidation but the most commonly used methods are the following ones:
Credit Card Consolidation – If you are one of the hundreds of thousands of people with a number of credit cards and store cards with outstanding balances then this method of debt consolidation is probably the most appropriate for you. Credit card transfers allow you to take all of those outstanding balances and all of the high interests you are trying to repay and then roll them into one single credit card at a significantly reduced rate of interest. Normally there are hundreds of different deals available from various credit card companies, all offering extremely generous introductory rates of interest to new customers who transfer their current balances from other cards. They do this to win your business and with competition for that business being intense it is often possible to find 0% interest on balance transfers for 6 months or even a year. This is ideal because it not only massively reduces your current monthly payment, it also allows you to pay off the debt, rather than the interest on the debt. Best of all, if you are smart about it you can transfer to one card for the six months and then when that 0% deal lapses, simply transfer to a new card offering a similar deal.
Secured Loan Consolidation – If you have been lucky enough to buy your own home in the last few years and you have managed to pay a significant amount off your mortgage then the chances are you have a good deal of equity in that home. If that is the case then you are eligible for a loan that is secured on your property. This is one of the best options out there for people with a number of smaller debts. A one time secured loan to get yourself clear and wipe out all those debts is a very good use of some of that equity in the property. This will leave you with one much smaller payment every month at a much, much lower rate of interest and over a much longer repayment period.
Unsecured Loan Consolidation – For people not able to borrow against equity in their home, (either because they do not own their own home or don't have enough equity if they do) an unsecured loan is another option. If you have a very good credit rating and a good relationship with your bank then you should be able to take out a single loan to clear all of these debts and replace them with one monthly repayment at a lower rate.
Esther writes for a number of consumer finance publications and blogs. She covers everything of interest to the general public, from investments to tax reduction and from mortgages to savings accounts. She also writes for a UK Payday company.
I'm Louida from Atlanta, Georgia and I'm a mother of two daughters, blogger, and full time working mom at a Business Consulting Firm.
I love helping others learn how to start working from home on the internet free to supplement their current income.
I also blog at Productreviewmom.com
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