Debt consolidation is a primary consideration for getting in control of your debt woes. Economic turmoil, joblessness, inflation have contributed to the massive debt consumers have taken on. It does not increase debt, it may even lower it. But dealing with a financial situation that includes loans scattered across your economic horizon is tough. Debt consolidation pays off all those scattered loans so that you end up making one payment, at one time of the month, at one interest rate, to one creditor makes getting a budget under control so much more fluid.
Point One: 25% Debt Reduction You did not get a good deal unless the payment plan you are offered results in a reduction in payment of 25% off the sum total of your debt payments before consolidation. Hypothetical situation: Take a 5-year loan of $100,000 at 8% interest. Take another loan of $100,000 at 15% interest. Paying each of these loans individually, the total payments over the period of the first loan will be $121,658. For the second loan payments will total $196,601. Thus, the total of both loans through their maturity will be $315,259. If that total is not reduced to around $237,000, you did not get an effective debt consolidation loan.
One that eliminates impulse spending and too many nights out. Having just one payment rather than many should make devising your budget pretty much a no-brainer. Stick to it. You do not want to repeat the nastiness that drove you to debt consolidation in the first place.
However, make sure you create the account which offers high interest rates and is easily accessible. After all, you’ll want to access the money when the need arises without any hassle. Shop around for the bank that is offering the best rate to the consumers. The higher the interest rate, the greater will be your saving.
Use the money to repay your debts: This is one of the best ways to use your tax refund. You can use that money to repay your high-interest credit cards. If you think that it is not possible for you pay the debts on your own, then you can consult debt consolidators. The debt consolidators will suggest the strategies to clear your dues. You can use the extra money to pay the fees charged by the debt consolidators and fulfill your debt obligations.
Someone who has no defaults or late payments on their credit histories is considered a good risk and has a good chance at landing a debt consolidation loan. Also, if a working spouse is involved, his or her credit report can lend favor to your consideration.
Give Yourself a Break Stress and loss of sleep are not good. The phone at home and at work ringing with collectors on the other end is not fun. Just thinking about the onerous debt is debilitating. One of the primary jobs of debt consolidation is to stop the harassment and any litigation. You should not get any more phone calls, nor threatening letters, nor threat of lawsuit or other legal proceedings, nor threat of garnishment.
Apart from the above, you can use the income tax refund to improve your lifestyle. You can use the extra money to enroll in a gym or a business course. Moreover, you can also hire a career consultant to better your job prospects. The consultant can assist you get a good job or even a promotion. If you feel that you need a makeover, then you can hire a personal stylist for yourself. This will not only make you beautiful but also more confident.
Harris Smith offers advice on home equity line of credit and obtaining credit. Applying for Debt Consolidation can help.
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