Debit Consolidation Programs

You're the only debit consolidation program you need.

For those of you who know what I'm talking about, you can skip down to the next paragraph. If you're scratching your head, read on. Getting debit under control boils down to one thing, and that's getting yourself under control. The vast majority of people who have problems with their finances are in the situation because they're careless and lazy. You have to change behaviors before you can really, truly, address the problem. Otherwise you're just treating a symptom.

The first step is to stop borrowing money and learn to live within your means. In other words, figure out how much you make and don't spend more than that. It's very, very basic. Notice I didn't say easy, I said basic. In today's world with every company throwing credit cards, loans, and no-interest deals in your face everywhere you turn, living within your means is anything but easy. You're under constant pressure to borrow money and buy something you can't afford, and that's the first step to financial trouble.

Make no mistake, it's a a daily exercise in self control, especially if you're used to whipping out your plastic and buying whatever whim is at the top of your conscious thought. And, if you're already under mountains of debit, it's easy to rationalize a "it's a drop in the bucket, who cares" mentality. Let me tell you, as someone who was under mountains of debit at one time, it does matter, and your thought process changes when you are sitting on a pile of cash rather than under that mountain.

When you're watching your bank account go down rather than your credit card balance go up, the decisions are much more real and you make them much more cautiously. Being debit free, except for possible your home mortgage, is an incredible feeling, and it takes so much stress out of your life.

So think about your habits and your thought processes before you start to dig yourself out of the hole you're in and create more problems.

Debit Consolidation Loans for Students

If you're a student, more likely than not you have some student loans that you are either currently making interest only payments on, or that are deferred until after graduation. Also, it's likely that you have a combination of federal and private loans. It's fairly rare in this day and age that students can subsidize their entire college education with only federally subsidized student loans. So the situation looks like this: you have both federal and private student loans at varying interest rates, terms, and from different lenders. You're making payments on some and not on others, and you're about to pull your hair out from the frustration of the whole situation.

Debit Consolidation Loan to the Rescue
The answer is simple: get one lender to pay off all the other loans you have, then make one payment to them. Problem solved - almost! You want to be cognizant of your interest rates and payment terms, and make sure you're not paying off your federally subsidized loans with unsecured debt at a higher interest rate.

Secured Versus Unsecured Debt
Here's a crash course in secured and unsecured debit. The former means that you have borrowed money from a lender and put some sort of tangible asset (in most cases) against the loan. If you fail to pay the lender back in the framework of the agreed to terms, they have the legal right to take possession of the asset (a.k.a collateral) and sell it to get their money back. An unsecured loan means that you have borrowed money from a lender and have no asset that will cover the loan if you default. Credit card debit is a great example of this. If you fail to pay off your credit card, all the bank can really do is send debit collectors after you and possibly take you to court to force you to pay, or sell assets. On the secured loan side, think about your car loan. If you fail to pay your car loan the bank will send a repo man in the dark of night and take the car back to sell it. Problem solved.

Lender Risk Versus Reward
Now let's take it a step further. FRom the above example, you can see that it is much more risky for a bank to give out unsecured loans. That is, there is a greater chance of losing their money if the borrower jumps ship. In a secured loan situation, they take possession of the asset and hope to get the lion's share of their money back. In the financial world, that risk is analogous to interest rates. For a greater risk, the lending institution will demand a higher payout. The same runs true for mutual funds and other investment vehicles. If there is larger risk that you may lose money, you expect a great chance of a high magnitude payout. The bank will charge a higher interest rate because they are taking a greater risk.

Back to Student Loan Debit Consolidation
Back to the original point - federally subsided student loans are guaranteed by the government. You don't have to put assets up a gainst the loan because the federal government has guaranteed that the lending institution will get their money back, come hell or high water. That's one of the reasons that federally subsidized student loans cannot be disposed of in a bankruptcy. The government doesn't allow it. So, to bring it all together, don't get a debit consolidation loan for your federally subsidezed loans, only your private loans, because those will be unsecured and at higher interest rates 99% of the time.

In the next article we'll talk about credit card debit consolidation, how the secured versus unsecured rules apply, and how you can really end up screwing yourself if you're not carefull.

Debit Consolidation Advice

Credit Card Debit Consolidation
First things first – cut up all your credit cards. You’ll never get out of debit if you keep spending money you don’t have. And that’s really what this is about, isn’t it? Setting a budget and living by it. Don’t get a debit consolidation loan just to go into more debit that you can’t pay. It’s a viscous circle, and you don’t want to be caught up in it. Bottom line – don’t even think about debit consolidation for your credit cards unless you’re ready to change your spending habits and live on a budget.

Controlling Credit Card Debit
When you use credit cards, you are borrowing money. And borrowing money means you’re paying interest on it. There’s no such thing as a free lunch, right? Well, mostly. There are some lunches in the debit repayment world that are free – for a time. If you have a credit card debit with high interest rates, think about trying to find a zero percent interest card that you can transfer it to, and make sure the fees are low or non existent. This is the easiest form of debit consolidation that you can pursue, and it’s probably one of the most effective. Eliminating the interest that you’re paying on a credit card makes the payment that you are making that much more effectively. Think about it – a credit card at 10% interest (and that’s fairly low) with a $10,000 balance costs you almost $100 a month. If you transfer the balance onto a zero percent interest promotional card, you’re buying yourself another $100 per month. Multiply that by two or three cards, and you’re talking real money. It’s debit consolidation at its best.

Using your HELOC for Debit Consolidation
This is only something you should pursue if you’re willing to change your spending habits for good – and I mean you’re absolutely dedicated to it. Using your home equity line of credit as a debit consolidation loan can save you some significant money, but also put you at significant risk. What you’re doing is transferring unsecured, high-interest debit into a lower interest, secured debit. This is known as securitization. Remember, when you do this you’re agreeing to sell the asset that you have secured your debit with in the event that you can’t repay the debit. In the case of debit consolidation with your HELOC, that means your house! You can see where this can get very, very dangerous. Think about it – it shouldn’t taken lightly.

Debit Consolidation Companies

This is a company that SHOULD help you negotiate with your lenders for lower rates, principle relief, and repayment plans. I say should, because they don’t always do so. Look for a lender that will work with you on a plan that you’re comfortable with. Don’t be afraid to ask questions, and make sure you understand everything that’s going on before you commit to any courses of action.

Is a Debit Consolidation Loan Right for You?

One of the most upsetting circumstances in a persons’ life is finding yourself weighed down with debit, to the point where you feel you’ll never get it paid off. Recent reports have shown that the number one issue in troubled marriages is money, and the number one money issue is too much debit. Frequently, marriage counseling professionals find themselves becoming proficient financial advisors due simply to the amount of exposure they have to the issue.

When visiting a debit councilor, expect to be overloaded with questions about your financial situation. They will attempt to find out all your debits, your income, your spending habits, you savings, and compile a complete picture of your financial situation. If you’re not honest with them at this stage in the debit consolidation program, you will never see the results you’re looking for as their plan for a debit consolidation loan will be based un unrealistic income, debits, or both.

Once all these data are on the table and the debit councilor can make some basic calculations, they will tell you what your total payback amount will be, including interest, and how many years it will take you to accomplish it. They will look at where you’re spending your money, and find ways to streamline your expenditures so you can focus some more of your income on paying down your debit. They’ll also look at some debit consolidation loan programs to determine if you would benefit from them or not.

In some cases, a debit consolidation loan isn’t the best answer and will be more costly than simply paying off the debit as it currently exists. This is often the case with secured debit that has a relatively low interest rate. The only benefit a debit consolidation loan will offer in this situation is one lender to whom you must submit payments, and with associated fees, a debit consolidation loan may even cost you more than your current situation.

However, if the debt counselor believes that may benefit from a debit consolidation loan, he or she will begin speaking to all the companies that you owe money to in an attempt to negotiate a decreased payoff amount. A good debit consolidation loan councilor will pass some of these savings on to you, so work closely with them at this point to maximize your benefit.

As a side note, expect the credit card companies to offer lower APRs if you keep your balance with them. They’re making money off the interest that you pay, so it is in their best interest to keep your balance on their accounts. If you do want to keep nay of your credit card balances, maximize this opportunity.

Now, if you decide to keep some of your balance with a credit card company instead of completely utilizing a debit consolidation loan, you need to make sure that everything they agree to is in writing. Many credit card companies and debit collectors are somewhat dishonest and will be happy to get in you in worse trouble than when you started.

There is much to think about before you make a decision about how you are going to solve your debt problems. A debit consolidation loan may be the right answer, but nothing will change down the road unless you learn to live within your means.

What is Debit Consolidation?

Debit consolidation is the practice of taking many loans and combining them into one, lower interest rate loan. This can be done to lower payments or simply to gain the convenience of dealing with only one company when making payments.

Debit consolidation can involve either secured or unsecured loans. In some instances, the borrower uses their house as collateral to combine many unsecured debits into a lower interest rate secured loan. This is referred to as collateralization. Keep in mind, when you take this route to consolidate your debit, you are legally obligated to sell the collateral if you cannot pay back the loan. This is commonly referred to as foreclosure.

In other scenarios, a debit consolidation company will buy at-risk debit from the lending company at a discount. A good debit consolidation company will attempt to pass some of these savings on to their customers. Unscrupulous ones will not.

Often, companies will attempt to charge very high fees when offering debit consolidation loans - sometimes the maximum allowed by the state. Be wary of these companies, and also avoid waiting until the last minute to consolidate your debit. You may not have time to shop around to find an honest company and be forced to accept usurious rates from a predatory lender.

The basic rules of debit consolidation are simple: don't wait till the last minute and don't use something as collateral that you can't live without.

Debit Consolidation

Welcome to Debit Consolidation Advice. This blog offers information about how to get out of debit, using debit consolidation services, dealing with debit collectors, and debit consolidation. If you have any questions that aren't covered in this blog, please feel free to email me.