Three Basic Debt Consolidation Steps - Finance Plan | FinancePlan ...

There is a lot of talk these days about debt consolidation, mainly from companies that offer to do it for you for a fee. This is unnecessary. The basics of debt consolidation are simple and something that everyone who is struggling with debts should do. The idea is that you simply roll all of your lesser debts into one larger, lower interest debt that is easier to handle and to repay. This simple idea has become a commonly used route for people in debt to improve their financial situation and to make sure that all of their debts don?t push them under water. Debt consolidation helps with this, both by giving you some breathing room on the time you spend having to deal with all the different debts and by cutting down the amount of money you need to pay back through a lowering of the interest rates. By cutting out all of the various creditors that you need to pay off each month and the high interest rates that they are charging you and through the ease of only needing to pay off one payment, your debt situation will be vastly improved. Follow these tips on debt consolidation and save yourself some money:

Credit Card Transfer ?This is the automatic first place to begin if you have a number of credit card debts. A simple bit if research and you will be able to find a balance transfer offer that will significantly reduce your monthly debts. All that is required is a bit of online research through all of the hundreds of balance transfer deals to find the best one and then a bit of paperwork. Once you?ve done that you can switch cards and reap the benefits of reduced interest and repayments. These transfer offers are the way credit companies compete for your business so you might as well make use of them. Simply shop around until you find one offering 0% interest for six months and then switch. By having 0% interest you will be paying off just your principal and not extra interest, which will reduce your debt much quicker.

Secured Loans ? If you are one of the lucky people out there who both own their own property and have managed to retain some decent equity in that property whilst prices have fallen then you will be able to take advantage of secured loans. A secured loan will allow you to cover all of your different debts, repay them into one lump sum and then have only one lower interest repayment. This will, in one swoop, make you debt free, apart from the payments on your house which will be much smaller.

Unsecured Loans ? If you?re not one of those lucky people with a house and equity then you will need to rely on an unsecured loan. Provided you have a good bank manager and decent credit, it will be worth taking out one loan to clear all of your debts and then to repay at a lower rate.

Esther is a financial and legal journalist and blogger. She writes about all areas of personal finance and consumer law from credit cards to business loans and from peer to peer lending to financial contracts to where to find a receivable financing company.

Source: http://www.financeplan.info/three-basic-debt-consolidation-steps/

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