The Indisputable Benefits of Debt Consolidation

Surviving in the modern economic environment
 
On a regular basis, we hear about people who are simply no longer able to manage their finances effectively. Among those people, it is especially people who are struggling with medical debt which they have not willfully chosen that are to be pitied the most compassionately. The reality is that no sane person willfully chooses to become ill and this is exactly why it simply does not seem to be fair that medical debts should be treated in the same harsh manner as other kinds of financial debt such as credit cards and financial loans. Fortunately, there has been some changes in the way in which fico scores are awarded, especially as they apply to medical debt. This is providing people who are struggling with medical debt with at least some relief. The reality is that an increasing number of people are facing this problem each and every day. Living costs have escalated sharply over the last couple of years and especially so since the latest recession, which has caused a lot of problems for millions of people. There are also those people who are struggling to repay a mortgage while at the same time, they simply are not able to sell their home because of reduced property prices. It seems that a very large number of people are finding themselves in a situation where they simply can no longer cope with the current economic conditions.


The same thing applies to vehicle finance

For many people, reliable transport is critically important in order to successfully execute their duties, but just like everything else, the prices of motor vehicles have increased sharply and this requires a substantially larger loan when such a vehicle is purchased. However, especially after the recession when thousands of jobs have been lost because most corporations were left with no other choice but to reduce their labor force in order to survive under difficult economic conditions. This has resulted in the inability of many vehicle owners to afford the payment of those vehicle loans. Now, they are forced to deal with those outstanding loans and they are left with no other choice but to find an alternative way to resolve those problems. A large number of consumers struggle when they are presented with such a stressful situation and then they make very foolish decisions which often results in an even worse financial situation.

Consolidation makes a lot of sense

It can be very stressful when you are contacted on a frequent basis by various creditors, all of which are determined to collect unpaid debts. You have barely gotten off the phone with one creditor before you are forced to repeat the whole process once again with another creditor. This can drain your personal energy very quickly and can leave you with a sense of hopelessness regarding your situation. However, if you could manage to consolidate all your debts so that you are only required to deal with one creditor, that would significantly reduce the amount of stress to which you are exposed. This will lead to significantly higher energy levels which could then be utilized to effectively concentrate all of that energy on finding a way to resolve your debt problems as quickly as possible. Debt consolidation is genuinely a solution which holds many benefits for persons who are struggling with large financial debts.

source: 20smoney.com

How Does Student Debt Impact Your Mortgage?

Let’s say you’re a recent college grad. You’ve landed your first real job (or maybe you’ve been working it for a while already) and after years of dorms and apartments, you’re realizing you might as well start building equity in a place of your own.

You wouldn’t be alone. Though you’ll see articles all over the place insisting that millennials just aren’t interested in buying homes, a closer look at the data says the opposite is true actually true.

However, there’s one small hiccup: student loan debt. In 2013, the average student borrower graduated $28,400 in debt, which will almost certainly lead to problems when they try to qualify for a mortgage. So what can you do if all this describes you?

First, let’s take a closer look at the why of this problem.

How does student debt interfere with getting a mortgage?

When lenders do all the math to figure out whether or not you’ll be able to make your monthly payment, they take special care with something called a debt-to-income, or DTI, ratio.

This is almost exactly what it sounds like—it allows banks to get a feel for how much of a borrower’s income is already accounted for by other debts. Ideally, your DTI ratio should be 43% or below, as that’s the cutoff point most banks will use.

Even if your loan is still deferred, which means you haven’t begun payments on it yet, lenders will still estimate monthly commitment from you, though it may be even higher than the standard minimum payment.

What can you do?

Well, there’s the obvious, solution: pay down your debt before applying for a mortgage. Of course, obvious doesn’t always mean easy. Paying off your student loans will take time and careful budgeting, especially if you’re trying to save up for a down payment at the same time. That may mean some serious cutting back on living expenses or avoiding big purchases.

Of course, the other way to improve your DTI ratio is to increase your income. Earning a raise, moving on to a better paying job, or even taking on a part time one are all ways to do just that. Make sure you do so several months before applying, though, or your lender may not count the income.

If neither of those options work for you, you can always try to consolidate your student debt, or convince a parent to co-sign with you. Whatever you do, though, make sure to keep your credit in good standing, or you’ll have to add “bad credit” to your list of problems to fix.

source: totalmortgage.com

Thinking of Refinancing? 4 Good Reasons to Follow Through

For the past couple of years, mortgage rates have been lower than they’ve been in decades. So if you’re thinking about refinancing your home loan, now’s as good a time as ever.

Refinancing involves getting a new home loan to replace an existing one. If you’re unfamiliar with refinancing or if you don’t understand the benefits, trading one mortgage for another might seem pointless. However, refinancing a mortgage loan is one of the most effective ways to modify your mortgage terms. Here’s a look at four things you can accomplish by refinancing your home.

1. Get a cheaper interest rate

Since mortgage rates can change from year-to-year, the rate you’re paying might be higher than current mortgage rates. You might also have a higher rate if you didn’t have the strongest credit score when originally applying for the loan. If your credit has improved since buying the home, this is your chance to get a cheaper rate. Unless you’re able to get a mortgage modification, refinancing is the only way to take advantage of lower mortgage rates, which can save thousands in interest over the life of your loan.

2. Get a lower mortgage payment

Not only can refinancing lower your mortgage rate, it can lower your mortgage payment. Your monthly payment is based on your loan amount and your interest rate. And if your monthly interest charges decrease due to a lower rate, so does your mortgage payment.

Depending on the difference between your old and new mortgage rate, refinancing can potentially reduce your mortgage payment by hundreds every month. This creates additional cashflow that can be used for other purposes, such as paying off credit cards, saving for retirement or building an emergency fund.

3. Get a fixed-rate mortgage

If you have an adjustable-rate mortgage, refinancing to a fixed-rate home loan is the only way to get a fixed, predictable mortgage payment. Adjustable-rate mortgages have a fixed-rate period, which is typically between three and five years. After this period, the interest rate resets every year, either increasing, decreasing or staying the same. Locking in a fixed-rate offers protection from rising interest rates.

4. Get cash from your equity

If you’re sitting on thousands of dollars of equity, you don’t have to sell your property to get this money. A cash-out refinance puts equity in the palm of your hands. You can use the money for debt consolidation, college expenses, a wedding, home improvements or start a business. You can borrow up to a percentage of your available equity, usually 80 percent. Just know that a cash-out refinance increases your mortgage balance, often resulting in higher monthly payments.

The Bottom Line?

There’s plenty to think about before refinancing your mortgage loan. It’s important to understand exactly why you’re refinancing, and you need to weigh the pros and cons. There’s no way to know for certain when rates will rise again. So take advantage of low mortgage rates and save money while you can.

source: totalmortgage.com

Four Strategies to Completely Settle Your Credit Card Debt

If you are looking for information on how you can pay off your credit card debt in the soonest possible time, then we advise you to pay close attention to the remainder of this piece. Below, we have listed down and tackled four effective strategies that you can use to gradually pay down what you owe so that you can eventually free yourself from your credit obligations.

Tried and Tested Tactics for Paying Off Credit Card Debt


Come up with a credit management plan on your own. Many consumers have successfully retired their credit card obligations by making important changes in the manner by which they manage their personal finances. Some found it necessary to limit the use of theirfor credit counseling services. You can also rely on the experience and expertise of financial advisers to free yourself from the bondage of credit card debt. To do this, you just need to sign up for credit repair services with a credible counseling firm. For sure, with the help of a certified financial adviser, you will discover effective techniques on how you can gradually settle your credit obligations and soon rehabilitate your credit profile. Your credit repair course can also help you gain insights on how you should manage your personal finances so that you can prevent yourself from falling into debt traps, which can once again inflict severe damage to your credit standing.



Apply for a debt consolidation loan. In some cases, you must apply for another credit program to completely retire your outstanding financial obligation. After all, you need to have ample funds to pay off your credit card debt, once-and-for-all. Good thing there is a popular credit program these days called debt consolidation loan. Under this program, you will receive sufficient funds that will allow you to settle all your existing credit obligations – such as credit card debt, an unsettled secured or unsecured personal loan, and even unpaid utilities bills. In return, the lender will ask you to pay back what you borrowed in affordable monthly installments which will be based on your financial capability.



File for bankruptcy. Bankruptcy is rarely considered as an option for retiring credit card debt. Rather, it is perceived as a last resort, most especially if all the efforts that you have invested to pay off your credit obligations proved to be in vain. After all, with this program, you can expect to have a clean slate once your credit accounts have been completely discharged.



Still, you need to remember that there are stringent requirements imposed on those who wish to apply for bankruptcy. So, before you process the paper works and apply for this program, we encourage you to seek professional assistance from a bankruptcy attorney. Through this professional, you can soon discover if indeed you are qualified to file for this quick-fix strategy, and at the same time, you can receive valuable information that you can use once you start with your court proceedings.

source: creditcreators.com

Four Real Folks Who Overcame Their Debt

If you’re one of the millions of people engrossed in debt, it may seem like financial freedom is a distant dream.  The number of individuals living with debt in the UK has grown exponentially. In part, this is because of rising living expenses and unchanging wages. Based on a recent study, one in three Britons is in debt. That equates to £1.424 trillion in outstanding personal debt, this year alone. Although these statistics may sound menacing, it is possible to reduce and even eliminate your debt.  To prove that it’s possible, here are four average people who won their fight with debt.

Carrie Smith

Carrie Smith’s financial wake-up call occurred the instant she acknowledged her situation. At 28, she found herself with a staggering £9,300 in credit card debt. Eager to regain control of her finances and financial future, she managed to pay it all off in a year through hard work and strict budgeting. Carrie’s approach was to start with the cards which carried the highest interest rates. Most people immediately tackle the cards with the highest balance, but it’s wiser to evaluate the interest rate fees on a monthly and annual basis because that’s where you’ll be hit the hardest. To stay on track Carrie even made a timeline of her progress using a payment tool. And of course, she had to cut her frivolous spending– holidays, salon visits, cable, and dining out. The spending cuts were temporary, but the results enduring long past that year, Carrie points out.

Shari Gordon

Armed with a Master’s degree and a mountain of student loans to accompany it, Shari was unsure how she would repay the £20,000 she owed. She admits that at first she was in debt denial. When bills arrived, she barely paid the minimums. She soon realised that this approach was making no real headway so she broke down the balances into more manageable amounts and created a strict budget. In time, she was promoted at work and started looking for side jobs to make some extra money. It wasn’t easy, but Shari paid off her debt and now advises others on how to do the same.

Grayson Bell

Grayson Bell had dreams of owning his own business with his wife Jane. To bring his dreams to fruition, Grayson financed £33,000 with four different credit cards. When the economy took a turn for the worse, Grayson’s business unfortunately went under, leaving him with no substantial cash flow. As the debts piled up, Grayson continued to spend in hopes that the business would eventually recover. Two years later, his finances were still in ruin so he made the conscious decision to seek help. Grayson opted for debt consolidation as a way to fast track his financial recovery.  Consolidated Credit provided him with the tools necessary to create a budget, lower his balances, and pay off his cards. Today he’s proud to be debt free and on the road to building a new business.

Kate Flanders

Maxed out and looking for a way out, Kate was in over her head by age 25. With very little in her bank account and bills pouring in month after month she did what most people dread—moved back in with her parents.  Within a matter of month, she eliminated all the shopping trips, weekend getaways, and drinks with friends. After 6 months, she saved enough money to pay off her cards in full. Kate’s advice to people suffering from debt is to ask for help sooner rather than later.

Whether you have to create a budget, cut your spending habits, or seek debt consolidation it’s important to get a handle on your debt. It won’t resolve itself so it’s your responsibility to do your part in management and elimination.

source: everythingfinanceblog.com

The Real Truth About Debt Consolidation

The truth of the matter is that debt consolidation does not make your debts go away. In fact it doesn’t do a lot to help resolve your debts. It does nothing to improve your spending habits which got you into debt in the first place. The debts are still there and so are the same old bad spending habits.

You can never get out of debt by creating more debt. All you do with most debt consolidation loans is dig a deeper hole. Contrary to popular belief getting out of debt is never quick or easy which is the promise of most debt consolidation companies.

Many people think that their debts are the problem. Wrong! Debts are the symptom of bad spending habits. People with a lot of debt overspend and never save. Most financial coaches will never recommend debt consolidation because it simply does not work.

The Statistics Of Debt Consolidation

Most debt consolidation companies will tell you that approximately 75% of people that have their debts consolidated are back into debt within a year. So why does this happen? Because many people after getting their debts consolidated still have not corrected their spending habits and are still overspending and not saving for the “unexpected events” in life. Nothing has been corrected.

Debt consolidation loans are tempting since they have lower interest rates and lower payments than traditional loans. However research has indicated that the lower payments are not actually lower. The payments appear lower because the term of the loan is extended longer than traditional loans. Obviously if you stay in debt for a longer period of time you pay less, however, what most people don’t realize is that you are also paying the lender more money in the long run.

An Example Of Debt Consolidation

For example, if you are in debt for $30,000 which includes a loan for $10,000 with an interest rate of 12% and a 4-year loan for $20,000 with an interest rate of 10%. The $30,000 loan has a monthly payment of $517 while the $30,000 loan has a monthly payment of $ 583. That’s $1100 a month. You go to a debt consolidation company and they tell you that with them you will only have to pay $640 a month with an interest rate of 9%. How they can do this is by negotiating with your creditors and rolling all of your debts into one. Of course anyone would jump at the chance to pay less every month. What they never tell you is that now it will take about 6 years to pay off the loan. That still doesn’t sound too bad until you take the time to understand how long that actually is and that now this loan will take $46,080 to pay it off instead of $40,392 for the first two loans. In reality you just paid $5,688 more than you would have before. Now you know the truth about debt consolidation that they are in it for the money not to help you out of debt.

The Only True Way To Get Out Of Debt

The answer isn’t in the low interest rates. The answer is a complete makeover of your finances and your spending habits. You need to write down how you are going to spend your money and commit to it. The next step is to get a second job and pay off your debts and live on money much less than what you bring home. It’s not hard to do but it can create a lot of tension and be an emotional rollercoaster. Your best option is to consult a financial advisor that can walk you through the process.

source: 20smoney.com