Steps to successful debt consolidation

Successful debt consolidation is completely dependent on using the correct steps to identify and eliminate your debt load by consolidating it under one head before paying it off over time.  The first of these steps involves identifying what your debt load. Open those bills and statement and take in those number. If you have a mortgage, how much of your total debt does it represent? If it stands at 25%, it's fine. If a majority of your debt is consumer debt though, you have a problem. Also, how much is owed to friends and family and how much to creditors? Which has the highest interest rates? How much interest will you pay back over time? Figure these important questions out first.

The next step is to create a budget. Understand how much you need to maintain a decent lifestyle and then how much you need over and above that. Cut back on some unnecessary spending, like eating out and overly socializing. Once you've arrived at a compromise budget, apply for a debt consolidation loan. Make that appointment, hand over the documents requested and try and restructure your debt. If you have high interest unsecured debt (such as consumer or credit card debt) try and convert it into secured debt (such as a mortgage). This way, you will pay less by way of interest since the bank has security against the debt. 

Once that is done, stick to the plan and aggressively pay off your debt. Your lender might decide which loans get paid off first, but if some loan is causing you greater emotional stress (such as debt from a friend that has strained relations), pay those off first. Pay all of your debt off in a timely manner and once you're done stay debt free. Make payments as you would to a lender but now put it into savings or investments.  Don't overspend and don't try and keep up with the Jones'. It's a surefire way to fall further into the mire.

you may like to read another article how handle debt issues and debt management 101.

How to handle debt issues

If you are currently swimming through a sea of debt the likes of which you feel you will never be able to fully wade through, don't fear for you are not alone. Like you, there are several others that are finding their debt problems to be nightmarish. It is admittedly a very scary proposition and you should not feel as if there is no end to your worries. A problem to do with debt is still just that, a problem, and there are ways for you to get out of this situation eventually. All it take is planning and diligence on your part when it comes to stick to this financial plan you've come up with.

Particularly popular are debt management services. Managing your debt can be said to be a bit of an art and if you were to leave these problems to just sort itself out, you are going to find yourself in a financial tangle that could leave you looking worse than roadkill! This is where debt management solutions and services come into play, for they restructure your debt and offer you repayment options that are more affordable and more in keeping with any new realities and constraints that you might have to face up to. Several financial experts will teach you on how to get through these tough financial times you find yourself in and they will tailor a solution to fit your particular situation and your particular problems at all times. They have bags of experience when it comes to dealing with these problems and they can help you see off your debt problems.

Another option very many people pursue are that of debt consolidation services. If you have several debts, enough to make your mind spin, you can consolidate all of these debts under one single payment head and effectively keep an eye only on one number. This means you won't forget to make a payment and you will only have to take care of one monthly installment. Many others choose to simply redefine their lifestyle, cutting back on non-essential and frivolous spending. By redefining and cutting back on your expenses and increasing the money you have on hand, you can manage your monthly and day to day needs in a better manner than you previously could, but this can only work if you don't have a truckload of debt on your hands.

Consolidating your loans is by far and away the best option when it comes to managing your debts since you get
•    a lower interest rate
•    a single payment to make and
•    you can save money and cut your debts back a bit.

Consolidating a loan is a great way to get away from a mountain of loans. If that doesn't appeal to you, you can always talk to financial experts who will gladly guide you through to the promised land of financial freedom.

Debt management 101

As it is with a great many things, there is a lot of fuzziness surrounding a concept such as debt management. Does debt management merely concern itself with mitigating your debts or does it have a lot to do with actually paying it all off in good time? Or maybe it has something to do with both? Let’s try and bring some clarity to the situation. Debt is nothing more than an agreement between the MRA and your creditors aimed at reducing your debt levels over a pre-set period of time. Debt management, if properly executed, will help you work off your debts and get a clean state with which to plan your finances again.

So you ask yourself the inevitable question then; can debt management help you? The frank answer to that is that it might be, but it has a lot to do with your particular situation and there is no one size fits all solution. But one thing that can be said very safely is that if you are struggling to meet all of your payment obligations, but can meet some of them, then debt management might be for you. The one thing to keep in mind though is that a debt management plan will adversely impact your credit rating, at least in the short term and maybe even in the medium term. It’s not meant to be a “get out of jail free” card, and creditors and credit agencies certainly won’t see it that way.

Many creditors will be open to the idea of working with you and coming up with a plan that will reduce your interest rate and charges over a period of time, but be aware that drawing up a payment plan that is drawn out over a longer period of time will likely increase the amount you pay. Moreover, you cannot do this for a secured loan, so let’s get that idea out of the way. So, long story short, yes you may well be able to get out of debt by using a debt management companies services but your credit rating will be hit as a result of this, affecting your ability to get any loans.

Perhaps that is a good thing though since it will impart to you a crucial lesson of financial prudence. You know what they say about allowing a child to burn his fingers so that he doesn’t play with fire again, and it is much the same with allowing someone’s financial situation to be addressed by debt management services. Debt management is a double edged sword, and while it is always an option, it should not be your first option for meeting your financial obligations.

Get free debt management guideline at Supercfo.