If you are in a situation of facing a mountain of debt, have you considered debt consolidation? Undoubtedly you have considered your options, none of which probably look very attractive at this point in your financial life. Let's look at some of the options you might be considering right now. Do nothing. Get a personal loan. Bankruptcy. Debt Consolidation What happens with debt consolidation is that all your bills and debts are laid out for the debt consolidation company and they work with you to determine how much you can afford to pay each month. They then take your bills and you pay them one lump sum each month, which they then distribute to your creditors. But the real beauty of debt consolidation is that they give you the financial breathing room that you probably need right now as you are getting your financial life put back together. They contact your creditors and work out payment arrangements to lower your minimum payment, to lower your interest rate, and sometimes even to waive past due fees and late fees. This is typically not something you can do yourself, but when the creditor becomes aware that this is a debt consolidation company, they are typically more than happy to work with them for your benefit, since in their eyes, this is certainly a better option than being required to write off your entire debt and follow through on legal proceedings. What this means for you is that if you total cash outlay at the end of the month was say $3000 for all your bills, your new cash outlay to the debt consolidation company is now say $1500 or even less, based on what they negotiated for you. You need to make sure that you make your payments to the company every month, since they will not make payments to your creditors if you don't, which will put you in an even worse position than you are now. Consider debt consolidation, whether your debt is from credit cards, student loans, college loans, or whatever source, and give yourself the financial breathing room you need to get yourself back on track.
This is probably the number one worst option you could choose. Most creditors are willing to work with you to the extent that they can if you communicate with them and at least try to make some payments or even partial payments. This indicates that at least you are trying based on your current circumstances, but maintaining silence is simply going to tell them that you really do not care, and they will take the action that they need to based on your silence.
While this might help in the short term, it probably only is a delay tactic for what is inevitably going to happen anyway and you will find yourself back in the exact same situation in another couple of months, except now it will be a bit worse since now you have one more debt to consider and work with.
This should be an option of last resort and should not even be considered at this point, at least not yet. Depending on how bad your financial situation is and how long you have let it go before taking some kind of proactive actions to get it squared away, bankruptcy may be an option to consider for the future, but based on the fact that this is typically viewed as a drastic measure with long term negative effects in various areas of your life, which are not limited to finances, put this thought on the back burner for now.
Unless your financial stagnation has gone too far to be rescued, debt consolidation can get you back on the right financial track without the long term negative impact that bankruptcy would cause, and should definitely be something you should be looking to implement.
Finding Financial Breathing Room With Debt Consolidation
Want to Live Debt Free? These Tips Will Help
Do you dream about being debt free some day? This can be a reality if you follow some basic rules and do what it takes. To start down the road to financial freedom you need to do a few things first. Are you ready? Let's go.
Tip #1. You need to admit there is a problem.
Is there not enough cash coming in or is it spent too quickly, or both? Is the money being spent on non-essentials? Is the income being spent unwisely on luxury items that you cannot really afford? Do you know how much you really have to spend? Do you know how much you owe and to whom?
You need to honestly answer these questions and be prepared to take some action.
Tip #2. You need a make a plan and stick to it.
First of all, you need to know your financial situation. Take out all your credit cards' statements and add up the outstanding balances. Make a plan to reduce the debt to a certain level within a fixed period of time. Once this is done there are tools you can use from the Internet to track your spending and your debt reduction.
Imagine what you will be able to do with the money you currently use to pay off debt.
Tip #3. Never add to your debt. Cut up the credit cards and live within your means.
Work out ways to cut down on your expenses so that you can live within your means. Start to put some funds aside for emergencies. You can cut down your expenses easily if you just think creatively. Here are a few suggestions to get you started.
a) Anything you need (not just want) can usually be bought at a sale. Commit to not buying at retail prices again. Look in newspapers, wait for sales and be patient.
b) Cook at home a lot more often. Freeze leftovers. Plan you food needs for the week. Make your lunch for work instead of buying it each day.
c) Read magazines, get DVDs and Videos for free from your local library.
d) Take up a hobby. Get busy - shop less. Maybe your hobby can create some income?
e) Give up the coffee bought while shopping or at work.
f) Maybe if you tried you could get away with only 1 car. Travel by bus or train if possible.
Tip #4. Don't compare yourself with others.
If you spend to keep up with others, think whether they may be in a similar position to you. Work out and understand how much you can spend and how much needs to be put aside for saving or emergencies.
Tip #5. Pay off one small debt completely.
This will give you a boost and help you keep on track more easily and you'll be more motivated to pay off all the debts.
Tip #6. Keep some fun money.
This process needs to be fun, not a misery. If it becomes a chore you will be tempted not to meet your goals. Keep some money aside that allows you the freedom to spend on things you want, occasionally. You'll feel so much better about spending on items that you can afford.
To truly solve your debt problems you need to keep yourself under control. There's no one else who can do this for you. Ask for God's help also. You'll be so glad you did, once the debt burden has been lifted and you can become your own person.