Personal Finance Blog Rotating Header Image

debt consolidation

Tips on money management Debt Reduction

Finding yourself in a financial mess is a frightening personal discovery. Normally, people don’t really realize that they are in such a jam until they’ve reached the breaking point. Whether you’re already at the breaking point or not, unfortunately shrugging it off or running away from it won’t make it go away. It actually takes a long time to get in debt, even years. Hence, getting out of debt can never be fast-tracked.

There are no short cuts in addressing such a problem and this is where money management debt reduction or debt consolidation loans comes in. Majority of the people who are in debt are the ones who don’t realize where they’ve gone wrong. They are the ones who spend their money impulsively without thinking of the repercussions of their spending habits to their financial commitments and other responsibilities. However, if you are in debt, don’t despair; the good thing is you’ve come to realize it which is the first step to solving such a problem. The first thing to do is to manage your money in such a way that it will reduce your debt and hopefully get out of debt as soon as possible.

Your Money Management Debt Reduction Plan
There are a couple of steps that you can do to reduce your debt. If you could take these steps religiously, then you could be off to a new and financially healthy life in the future.

1. Assess yourself.

The first step to money management debt is to face the music. Find out how much debt you really have. Once you already have a clear picture of the gravity of the situation, you will be more pumped up to do something about it. Of course, you have to find out where you’ve gone wrong and you can do this by looking at your spending habits for the past months and past years. Check out which of the expenses you made were not really necessary; your goal is to find out your biggest source of unnecessary expenses like cigarettes, dinner dates, gas, etc., so you could see if you could do something about them. One of the main reasons why people get into such financial problems is their spending habits so it’s very important that you take extra measures to correct your spending habits.

2. Create a monthly budget and mean it.
Having a budget is one thing, sticking to it is another. It’s very hard to stick to a budget, but it’s not impossible as long as you keep it realistic. Money management is basically about planning, monitoring, and controlling. When you do your budget, compute for your monthly income and your monthly fixed expenses like rent, food, travel allowance, etc. With this, you will see if you are really earning enough to cover all of your basic or fixed expenses. If not, then perhaps you should find other sources of income like doing freelance work, selling some of your stuff that you’re not using, or getting a second job. Don’t forget to count in your miscellaneous expenses. When computing for your miscellaneous expenses look back on your past buying behaviors and clarify within yourself which expenses you can do without. In doing this, be honest with yourself. Money management debt reduction in really is a lifestyle changer; the main thing to remember is to not spend more than what you are making.

Of course, don’t forget about your main goal when you make your budget and that is to reduce your debt. Factor in your loan or debt payment schedules per month to your budget so that you’re sure that you’re able to pay them on time and save yourself from the late finance charges and other fees.

3. Be a smart credit card holder.
If you have credit card loans or debts, what you can do is to learn more about your credit card services. Find out which credit cards have the lowest interest rates; some credit card offer 0% introductory rates for a certain period of time. One of the things that you can do is to transfer your outstanding balance from one credit card to another credit card that has lower interest rates. Make an effort to pay more than your minimum amount due because when you’re only paying the minimum amount due, realistically you’re not really paying for the capital that you used or your debt. Also, prioritize paying your credit cards that have the highest interest rates.

If you’re biggest culprit is your credit card, then perhaps you should consider not using your credit cards. At least until you’ve paid your outstanding balance fully and until you’re very sure that you can manage and control your credit card habits for good.

4. Be a smart saver.
Every month, make sure that you save a certain amount of money even if it is just small. If you’re having a hard time controlling yourself from spending the money that you’re supposed to be saving, set up an automatic deposit for your savings account wherein a certain amount of money gets deposited into your savings account on a regular basis. Another way to save is by saving your pennies. Every night, put your loose change in a container; at the end of the year, you would be surprised how much money you’ve saved in it.

Money management entails a change in lifestyle. If you want to reduce your debt and even get out of debt in the future, then sacrifices have to be made.

Tips and advice in debt consolidation loans

Loan debt consolidation will keep your creditors happy and you keep more money in your pocket. Imagine how your wallet would feel with the total of your monthly payments a thousand dollars lower than what you have been paying for the last two years. You would finally have some breathing space. Has it been bothering you big time that now that you finally make your $20 an hour you still struggle to keep gas in your tank to get through the week? Hanging out with the guys from work after office hours would still break the bank? Now you have a solution to your uncomfortable position and it is only a mouse click away. Go to the website of your bank or credit union and see what information you can find on loan debt consolidation.

Loan consolidation

Getting a second mortage is not an option. You might want to check websites from other banks and credit unions too so that you can compare interest rates on debt consolidation loans. Do not automatically assume that your bank has the best offer for all your financial needs. While some banks are more specialized in home loans refinancing, other financial institutions have better deals on interest rates on credit card or the interest rates on their money market accounts are a lot more appealing. The same is the case with debt consolidation loans. Interest rates vary and it is definitely worth it to check and compare what competitors have to offer. So where is the advantage to you, the consumer, you ask? Debt consolidation loans will, in a way, give you back your freedom. The financial institution of your choice will combine all loans and outstanding balances you have which takes away your high monthly payment. They pay all these different creditors and these creditors will no longer bother you.

You will no longer feel restricted to pick up all your phone calls fearing that it might be another debt collector. The bank than gives you one loan for the total amount that they have paid to your creditors and set you up with a new long term loan with a very low monthly payment. Yes, you will be paying a very long time, but your immediate advantage is that every month you will have maybe one thousand dollars more that you can spend without having to use plastic. It will enable you to rent a house that is a lot better or a house in a neighborhood you like more than where you are presently living. You will be able to hang out with the guys from work, and yes, Christmas will be so much better. The difference in monthly payments will make it possible to go on a vacation again in the summer and paying cash for it. Loan refinancing is an immediate debt problem solution for many and you will be able to go to bed at night and start sleeping well!

Advice on credit card debt consolidation

Americans have been building up unbelievable amounts of credit card debt. They work on keeping their credit look nice by creating more and more debt. Usually they start their credit cards at a low or no interest rate. Here, refinancing your home mortgage could help to personal finances. As soon as they encounter a problem paying it off they try to solve it by taken out even another credit card with a possible balance of another few thousand dollars. Soon their credit becomes affect because of the fact that they have too much debt too their name, regardless of the fact that they have been paying every single minimum payment on time. As a result the different credit card companies start to adjust the interest rate, and they are legally allowed to do so.

Credit card debt

Interest rates of zero percent or six or 10 percent get adjusted to twenty three percent. Once one credit card company has taken this step the ball start rolling and the snowball effect becomes an avalanche, and your debt consolidation is in danger. When this is happening to you right now you than you should definitely take the following advice into consideration. Do not try to get another credit card with a six thousand dollar possible balance, especially not if your intention is to take money out so that you can pay all these minimum balances on time for another couple months. That solution would soon become a downfall and it does not solve anything really. The reality is that if you do that you will run into a similar situation a couple months later with just more debt on your hands.

What you really should do is live on rice and beans while trying to make at least the minimum payment while you pay extra all you can to the credit card company who you owe the lowest balance. If you do that you will get rid of your credit card debt eventually. If you are not willing to adjust your life style to such an extreme low like that or you would still not be able to make the minimum payments to all your cards than be advised not to wait too long and take some important steps while you are still in a position that you can take steps so before your credit is completely messed up. Go talk to the financial institution that you like or thrust more than the others and check to see if they will let you qualify for a consolidation loan.

It is always a good idea to go to the bank or credit union where you are making your mortgage payments to because if you have built up equity over the years they will very likely give your application a positive answer. By consolidating your card debt you will still owe the total amount of debt, but it becomes easier to deal with it because you will have to make payments to one creditor only. That payment will be lower than the total of payments you made to all your creditors before you did the card consolidation so you will be able to live a life again.