Debt Consolidation - Do the Math First

Although often advertised as the ideal financial solution, debt consolidation might or might not help you. You should think about a number of factors, including the interest rate of the loan, the sum you owe and the length of time you have to repay the debt. In the end, it is up to you to decide if you can benefit from a debt consolidation plan, because the lenders will always tell you that it will help you.

Debt consolidation is the practice of replacing several bills, such as credit card balances and car or truck loans, with one affordable loan. If the interest rate for the loan is lower than the rate for the loans it replaces, the debtor can save money. Debtors only have one bill to pay each month instead of many, and the new loan's payment schedule may lower the total monthly outlay for the consumer. These are definite positives, and many people have used debt consolidation to resolve financial trouble.

It is up to the borrower to ensure that he or she is better off, however. Consumers with debt troubles frequently have poor credit scores, and that can make it hard to borrow money at favorable rates. If you take out a consolidation loan at the same rate or even a higher one than the previous loans, there is only one way that your monthly payments can go down, and that is by extending the length of the loan. Lower payments are great, but if you extend the length of the payment schedule, you also raise the total amount of interest that you have to pay. It's quite possible that by consolidating debt, you could actually end up having to pay back more money than you owed in the first place.

Before rushing to acquire a new loan to pay off your debts, you need to do the math and see if you will really benefit from adding another loan to your life. If you can lower your payments by getting a lower interest rate, you will possibly benefit. If you are merely taking more time to repay, you may pay more in the end. It is your responsibility to figure out if you will actually save money, and that may be the most important thing you do. If you aren't good with math, find someone who can help you. You don't want to make a bad situation worse by acquiring a debt consolidation loan that harms rather than help you.

©Copyright 2007 by Retro Marketing. Charles Essmeier is the owner of http://www.Retro-Marketing.com, a site devoted to affiliate marketing, and http://www.End-Your-Debt.com, a site devoted to personal bankruptcy, credit counseling, payday loans and debt consolidation.

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3 Recommended Debt Reduction Strategies To Free You From Debt
By Judy Wellsworth

Every person experiences being in debt at some point in his life. Luckily for some, they are able to get out of debt very quickly and with no trouble at all. However, there are people who get stuck in the cycle of debt - and in trying to get out of the financial hole they are in, they dig themselves further down.

If you are like the millions of other Americans who are almost overpowered by the amount of money they owe, you will probably benefit from these recommended debt reduction strategies that we have gathered from reputable debt experts all over the country.

1. Never spend more money than you earn.

This is the top recommended debt reduction strategy by every debt expert in the country. You would probably think that this is pretty obvious, but surprisingly, many people are not even aware that they are in fact spending more than they are earning.

To really determine your spending habits, take note of where your money goes for an entire week. If your spending exceeds your income, then you know that it is time to make drastic changes in your lifestyle.

2. Limit your credit cards to two per family.

Another recommended debt reduction strategy is to not have a credit card for each member of the family. It's really a little preposterous the way many families even provide their kids with separate credit cards. This only encourages them to spend more without thinking about how to actually pay for their purchases.

One more recommended debt reduction tip when it comes to credit cards is to try to contact your credit card company and request them to lower the interest rates. It's pretty surprising how many companies would readily grant this request.

3. Take out a debt consolidation loan.

For individuals who have accumulated a sizeable amount of debt with various creditors, a recommended debt reduction strategy is enlisting the help of a debt consolidation agency.

They will pay off the debt on your behalf and you will only have to worry about paying the agency. This is a great help because you no longer have to pay the high interest rates that almost all large credit card companies are known for.

Although these are the top three recommended debt reduction strategies, following them is not enough to guarantee your freedom from debt. You still have to exercise discipline and prudence in order to fully reap the benefits of these recommended debt reduction strategies.

You can also find more info on credit card debt reduction and debt consolidation Getdebtreductionhelp.com/ is a comprehensive resource to know more about debt reduction.

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