|
||
Today, the number of people filing for bankruptcy has skyrocketed by 44% in just the past 10 years with numbers continuing to climb. Consumer credit has reached an all-timehigh, leaving more and more people in debt. While we need consumer spending to maintain and grow the economy, when money and credit are misused, disaster strikes.
Unfortunately, people are notorious for abusing money and before they know it, they are in completely over their heads with no way to get out – or so they think. In truth, there are options for getting out of debt, staying out of debt, and rebuilding damaged credit. Below, you will find the top five reasons for taking back control of your life with a debt consolidation loan or student consolidation loan.
Keeping your Home
Considering that the average cost of a home today is close to $175,000, it is easy to see why mortgages can zap a large part of a person's income. However, with interest rates now at a serious low and being a homeowner an excellent investment, this is the time to save your home. If you find that you are being swallowed up by bills and your mortgage is getting further and further behind, a debt consolidation loan could not only get you caught up on payments but also make owning your home more manageable and enjoyable.
Going to School
Unfortunately, there are people all across the country that would love to go to school or go back to school to complete a degree. However, the high cost associated with tuition, books, and supplies makes it impossible for many people due to the high level of bills. In fact, with so many people working two jobs just to stay above water financially, trying to fit in the cost of the classroom is simply too difficult.
However, by choosing a debt consolidation loan or student consolidation loan, you can get all of your outstanding debt under control. With this type of loan, everything is wrapped into one loan at a great interest rate and with payment schedules, you can afford. With that, your bills would be far more management, allowing you to earn the coveted degree that will only push you further into success.
Credit Card Interest Rates
Sadly, many credit card companies lure people into having a credit card, offering great credit limits and convenience. However, these same companies are charging anywhere between 20% to 25% interest on a single credit card. Multiple that by several credit cards and there is no way the individual could pay off the debt. Today, the average balance on a credit card is $9,000 and most people have five or more cards.
Unfortunately, people do not realize that if they had even a $1,000 balance and were to pay the minimum payment with a high interest rate, they would be paying on that one credit card debt for 20 years or more before finally getting it paid off, just because of the interest. That means they are spending thousands and thousands of dollars just for the “privilege” to carry around a credit card. By securing a debt consolidation loan, you could have all outstanding credit card debt rolled into one loan with a low interest rate. Therefore, the debt would be paid off within a few years, saving tremendous money.
Controlling Debt
Because so many people are struggling with debt versus income, debt consolidation loans and student consolidation loans are booming. With this type of service, you also have the opportunity to meet one-on-one with a professional counselor that will review your debt versus income ratio and set you up on a realistic payment plan that works specifically for you.
An agency that specializes in debt consolidation loans or student consolidation loans is structured to work directly with your debtors, working out lower interest rates and better repayment schedules. With that, you can keep a schedule that would allow you to pay off all your debt in 30 to 60 months as opposed to 20 to 30 years! The bottom line is that depending on the level of your debt, you would easily save anywhere from $1,000 to hundreds of thousands of dollars in interest, processing fees, and late fees.
Future Buying
When you go to buy a home, car, get a student loan, or go into business for yourself, the first thing that will happen is a report will be run on our credit history. This report will show potential debtors how much money you own, if you pay your bills on time, if you have ever had a judgment against you or filed for bankruptcy, and everything possible about spending and paying habits. If you are way in over your head from a financial perspective, chances are you are overextended with credit, have missed some payments, made late payments, and overall have a fair or poor credit report history.
That means if you wanted to buy a home or car, you would be denied. Maintaining good credit is crucial and something everyone should take seriously. A debt consolidation loan would help you get back on track so your history report is favorable, not damaging. With that, if you want to invest in a home when you get married, or buy a larger car when little ones begin arriving, you could. Therefore, a debt consolidation loan can help you with future buying.
Why? Because if you're in debt, then I'm guessing you've already missed a few payments, right? Well this means your credit rating has already taken a few knocks, which will make it harder to get that debt consolidation loan.
But you have other options that don't involve taking out a debt consolidation loan. And that is what I want to talk about today.
One option that you have is to get yourself a personal loan. Now I know that this won't help much if you're credit rating is damaged. But if it isn't too bad, then you may be able to get an unsecured loan to help pay off your debt.
If you can get the loan from a credit union, you may be able to save some interest. But even if you get the loan from a bank, you're going to be saving a lot of interest compared to what you're probably paying your credit card companies.
If you're debt mainly consists of credit cards (like most people, so don't feel alone) then an option that may be worth trying is to call your credit card company and see if you can talk your way into better terms. You may have some success with this, so it's worth giving it a shot. The person you're talking to will usually have permission to reduce rates, too. So give it a try.
Another option that may help you if you're a home owner is to get a home equity loan. These are usually quite low in interest rate, so you'll be saving more of the interest that you would otherwise be giving to your credit card company. Also, what you may not realise is that the interest you pay in a home equity loan is tax-deductible (unlike credit card interest).
The final option I'd like to give to home owners, is to refinance your home for more than you owe. This means you will get some cash out to pay off your remaining debt. This is a good option for some people, as it gives you a nice low interest rate… but your payments are now going to be longer, 15 years is usually the minimum, going all the way up to 30.
Bear in mind that the interest over this amount of time can get very large, so this isn't the best option over all, but it is an option if all else fails.