Please explain to me what a debt consolidation is. Is is bad for your credit rating? Why doesn’t everyone?
apply for it? Does it take a certain about of debt to qualify. Please give me the low down. I have excellent credit but just a large amount of debt. I may consider this as an option.
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Why would you want to roll all your debts into one, then take years to pay them off?
DON’T do debt consolidation. It just moves your debt around. It rolls high interest items AND LOW interest items into the same loan at a mid-range interest rate. It might lower your monthly payments, but that means it will take even LONGER to get out of debt. It also frees up all your lines of credit so you can simply run them up again! Finally, you often have to pay a loan origination fee.
Call all of them and work out a payment plan and try to get your interest lowered or stopped.
Then, make the minimum payments on every one of them. On the lowest dollar value, put all your extra effort toward paying it off. Once it is paid off, then roll that extra money to the next largest balance. Continue this snowball until all your debts are paid off.
You probably need to cut your expenses back to the bare minimum. Get rid of cable, cell phones, internet, etc. Lower your electric bill, gas bill, water bill, etc. Don’t eat at a restaurant until your debts are under control. Take a sandwich for lunch. Cancel the gym membership.
Try to increase your income by getting a second job. If you have a car with payments, get rid of it, and buy a good dependable used car for CASH.
Go to the library and get “The Total Money Makeover”. Read it and follow it carefully.
Go check out Dave’s website as well. Yahoo is blocking his site again, so take out the spaces in the following:
www. Dave ramsey. com
Debt consolidation is just that merging all debt into one loan, it is best not to let people just run your credit report as each time it is ran, it lowers your score. Talk to banks, credit unions, or a good credit card company. Take the lowest rate, after consolidating debt keep paying higher amount if you are paying it now keep paying it for a while to lower the PRINCIPLE not interest, if you can use real estate it is the best tax write off. For example I was paying out over $4,500 a month, after I consolidated my debt I now pay about $1,200 a month and still pay alot extra, in four month I have lowered the principle about $1,500, YES the amount looks large but the interest rates is now around 8% vs the credit cards average of 18% to 20%, cars and motorcycle at 10%, and house was a ARM (DON’T GET) went to 16% from 5%. Good Luck!
If you have numerous debts all at different rates, some rather high a debt consolidation loan can be a great idea. You may be able to get a lower rate and have only one payment. There are a couple of problems however. In light of the recent sub-prime mess the people who need them most are least likely to qualify for a consolidation loan at a decent rate. Another problem is lack of discipline. Many people who qualify for such a loan once they see their credit cards are paid off go back into their old bad habits and crank up the cards again and now have both the credit card debt and the new consolidation loan.
You say you have great credit but a large amount of debt. Your credit may not be as good as you think.
Debt consoidation sounds good, but it is usually just another mistake.
It takes what you owe and spreads it out over amny year. You end up paying mre in interest (which is why they are all pushing it – it is profitable for THEM).
Many people who consolidate, end up running up large amounts of debt again on credit cards – it is a vicious circle. There is no incentive to stop unning up debt until it is too late.
Pay off your cards, use the “snow ball ” theory. Starting with the lowest balance or highest interest rate first. Then once it is paid, take that payment, plus what ever you are paying on the next one, and so on and so on.
Working this way will maintain or imporve your credit score, and help you to learn to focus on debts and get them paid off. Don’t add any additional debt – at least until they are all paid off. Better yet – get rid of all those cards and close those accounts!
Good Luck
If you have a home you should concider refinancing and paying off your debt, and actually you can use the interest on your credit card to payoff your home faster, so you’ll use your debt on your favor might sound tricky but is actual and real, not many banks advertise this process because you’ll payoff faster.