Debt consolidation lead

If you are a stay at home mom in debt, and have multiple creditors, you may find yourself making many minimum payments each month just to stay afloat. Statistics show that an American family’s credit card debt of $10,000 will take over 30 years to pay off if only minimum payments are made.

That is an extreme example, but it is clear that only making minimum payments will significantly increase your debt due to accumulating interest charges. Being late only once can hike your interest rates even more, and lead to excessive fees and other charges.

Lenders offer the quick fix of debt consolidation, home equity loans and other programs that ultimately result in still more debt, and may jeopardize your entire future, causing you to rethink the financial aspect of staying a stay at home mom.

A plan is needed to directly address your debt, and offer a workable solution to ultimately get you out of debt once and for all. By carefully examining each penny you spend, and cutting out unnecessary expenditures, you can start saving money and reducing your debt at a sensible and much quicker pace.

First you need to track all of your daily expenses and find out where your money goes. Chances are you will find a lot of small, seemingly negligible purchases that seem inconsequential taken one by one, but add up to a significant financial drain on a monthly basis. By cutting out such excessive spending and putting that money aside, you should have a respectable amount saved at the end of each month.

Now you need to look at your various debts. Find the one with the lowest total remaining balance, and see what your monthly minimum payment is. If you have two that are nearly identical amounts, pick the one with the higher interest rate.

Suppose you owe Buy it Now Furniture $450, and your monthly minimum payment is $22. You have managed to save $60 by the end of the month, so you make your other payments as usual but you add the $60 to your normal payment of $22 and send $82 to Buy it Now Furniture.

At this rate you will pay off your debt in about six months, rather than years. Now you have a surplus amount of money each month of $82. Move on to your next lowest total debt, owed to Charge it Up Credit Company, where your balance is $1500 and your minimum payment is $45.

Add the $82 to the $45. Now you are making payments totaling $127, and you will see that balance drop rapidly as well. Once you have paid off Charge it Up Credit Company, you know what to do next. Add the $127 to the minimum payment on your next debt, and keep repeating the cycle.

This does take time, but you are paying off your complete debt to one creditor after another, and it is certainly not going to take as long as it would if you continued to make minimum payments alone.

Eventually you will become completely debt-free stay at home mom and it all started with a few less cups of coffee, a few more home-cooked meals instead of take-out, and $60 a month!

By: Rayven Perkins

At first, the lure of borrowing small amounts of money seems innocent enough. Content in the belief that the money owed will not be a problem to pay back, and further reinforced by the initial payments towards it, we can become ever bolder, getting deeper and deeper in until we reach a point where the debt is suddenly not so easy to pay down, and just paying enough to not go further in the hole becomes a challenge. When the point is reached where our payments don’t even keep us on even footing, a vicious downward spiral will begin that leads us deeper and deeper into debt with each passing day, as penalties and interest charges pile on top of each other.

Breaking free from this nasty cycle is difficult and takes many hard choices. One of the most common refrains for breaking free is to employ debt consolidation, whereby all of your debts, or at least as many as possible, are joined together. This can indeed be a great strategy, but is not without its pitfalls and perils.

Of course the simple transference of all your debts to one account does make your burden any lighter. One of a number of possible scenarios need to be place to make this venture worthwhile, besides any convenience factor it may offer.

To be of use to you, the debt consolidation must at least accomplish one of three things:

1. Decrease the total monthly payment amount
2. Lower the net amount of interest on your debt, or
3. Lower the total amount of your debt through the process of debt consolidation

Which of these, if any, will occur depends entirely on the debt consolidation plan you can get put into place.

The most common result will be that your overall monthly payment is lowered, which gives you a much greater opportunity to at least make your minimum payments each month and not slide further into debt. In rare cases, two or all three of the above scenarios may take place, in which case you can surely thank your lucky stars.

The risk here is that if the monthly payments are low enough that they are not a concern, those initial problems that led to the debt in the first place could resurface. Complacency and a sense of security could lead to one to add onto that debt again until they are back in the same boat as before, but with fewer options to escape the noose this time around. While worrying over debt is not healthy, not respecting it enough is always cause for concern, and will eventually lead to that worry.

And while those lower monthly payments from a credit card consolidation plan may seem a God-send, and probably are, they come as the result of a longer extended plan, meaning your paying more interest and money back for a longer period of time. It’s certainly a valuable way to wriggle out of trouble, but it will require a longer term of commitment to stay the course.

Once that debt shrinks and becomes ever easier to pay off, it will hopefully have the effect of you wanting to continue to put pressure on it and pay it down more and more each month. As long as you don’t let this opportunity slip past you, debt consolidation can be a great tool for those in financial crisis.

By: Eric Jilson

Recent economical developments have forced us all to look closely at our personal finances, possibly to find that we’re in a bit of debt trouble. The phrases, “You can have debt relief in just minutes!” “Cut your interest rates in half!” and “Drastically reduce your minimum monthly payments!” are very seductive, especially now.

With financial uncertainty swirling around us, and debt ratios being very high for some of us, the temptation to apply for a debt loan, or debt consolidation loan, is great. Some advertisers for debt loans lead us to think that somehow, magically, our debt will vanish in front of our eyes if we take advantage of their offers for help – all at a very low price.

But before you go running to find someone to give you a debt loan and make it all go away, you must take time to learn the dos and don’ts. Let’s first look at the don’ts to debt loans:

Don’t assume that getting a debt loan is easy or cheap. If you are considering getting a loan to consolidate all your debts and make things easier on you, it’s probably because you’re having some money issues and your credit has taken a few hits.

If you are aren’t a good risk for a loan, your debt loan is going to come at a price, even if your overall monthly payment is lower. You’ll probably be paying a really high interest rate (21% – 22%), and will be paying off the loan over a long period of time. With the recent economical upheaval we’ve experienced, your interest rate may be even higher.

Don’t assume that consolidators who promise to fix everything by getting you lower interest rates and cutting your payments are being completely truthful. Many of them add a fee to your payment, while also getting a kickback of sorts from your creditors.

They’re making money, and your debt is not getting paid down as quickly as you’d hoped. Some really rotten consolidators have been known to miss the payments they are supposed to be making on your behalf – making things that much worse for you.

Now for the dos:

If your credit is decent and you have a home with a fair amount of equity in it, do feel free to apply for a home equity loan. These usually come with relatively low interest rates, and that interest is tax-deductible.

Do apply for a personal loan. If your credit is reasonably good, you may qualify for a personal loan at a lower interest rate that what you are paying on your combined debts.

Do call your credit card company(s) and ask them to give you better terms. You can often negotiate a better interest rate yourself.

Do get help from a reputable organization for your debt loan. A good consolidator will not only help you get your debts paid off, they will provide debt management advice and counseling.

One thing that our “new economy” is going to force all of us to do is to take a saner approach to our debt, and to be more aware of organizations that will hurt more than help us. While we are still reeling from the upheaval that’s taken place, and wondering just how we’re going to get out from under our own debts, we can do our level best to make wise choices about debt loans and debt consolidation.

By: Tiffany Dow