How Can You Consolidate Your Debts Conveniently?
There are a number of reasons why people plunge into debt. The reasons might include but are not limited to indiscriminate credit card usage, too many credit cards, a big amount of medical bills, unemployment due to job loss, divorce leading to alimony payments or the urgent requirement to buy a new car. “How do I consolidate my debts” is a question that constantly haunts millions of debt-ridden individuals every day and how much money can I save?
Your paycheck is being utilized for various payments towards living expenses and utilities as well as the rent or the mortgage. Only making the minimum credit card payments that are identified on your credit card statements would require many years to wipe out your credit card debt burden. It is always advisable that you go for credit card bill consolidation using a personal loan with a lower interest rate to reduce the amount of interest you pay. Since the interest on your credit cards is not tax deductible, you definitely want to keep the interest cost as low as possible.
The following are several steps that consumers can consider as a means to get control of their debt, consolidate their debt and pay less interest overall. Take the time to consider this list and figure out which ideas are really best for you to consolidate your debt based on your personal situation.
• Make a list of all your outgoing expenses. While doing this, you must take into consideration your credit card balances, other debts from personal loans and mortgages, your utility bills, groceries, entertainment and general living expenses. List your take home salary that you get every month. Bill consolidation is a useful technique of combining plenty of smaller bills into a bigger bill and saving thousands of dollars in the process. Identify those expenses that you can do without until you have repaid your current debt and focus on reducing your debt to zero as quickly as possible.
• If you are sincerely trying to eliminate your credit card balances and looking for a home equity mortgage loan to consolidate your bills, you must know that the interest payable on your loan is tax deductible. Take advantage of this opportunity to reduce your overall taxes payable so you will have more money to repay your debt. In addition the interest rate on your consolidated mortgage will be much lower than the credit card debt, which will save you a great deal more in interest costs as well.
• It is always simpler for you to handle one bigger bill than multiple small bills. The amount of monthly payment for a debt consolidation loan has to be lower than the aggregate of all your existing loan payments, provided that you negotiate a personal loan or mortgage with a lower interest rate. Using a mortgage to consolidate your debts with a longer term will also lower your monthly payments as well leaving more money to use in other areas.
• Prior to signing a contract with a lender, you should go through the agreement cautiously. You must ensure that there is no prepayment penalty in case you have extra money and want to make a premature repayment. The money you save on interest can be wiped out if there is a fee for making early or extra payments. Making an extra payment will reduce the overall interest cost and help you repay the personal loan much earlier than the original plan. This is a great way of reducing interest paid and consolidating debt.
• If you can get online payment options free of cost, nothing can be better than that. It is the simplest and quickest means to pay off the loan. All payments can be completed manually by signing online and entering the transaction or they can be programmed to occur automatically at the same time every month. You never miss a payment and your credit rating never takes a hit either. Of course you must make sure that you always have sufficient funds in the account to pay for all of the automated payments.
• Bill consolidation is a tool that can help you save money. If multiple bills are merged into one bigger bill, it obviously saves you money every month, particularly if you pay for every transaction at your bank. You can utilize additional funds to alleviate your debt burden. Inquire whether making additional payments would create any problems for your lender. The more you pay, the sooner you would become debt free.
• Keep in mind that a home equity loan would usually have a repayment term of 15 years or longer and the interest is tax deductible. This helps you save money when you file tax returns by reducing the total income tax that you owe. Longer term mortgages will cause you to pay more total interest over the life of the mortgage, however your monthly payments will be lower as well, which may provide some cash flow relief if you have a lot of bills to pay every month.
These are some of the best ways to consolidate your debt and also minimize your cost overall. Pay your bills on time every month to protect your credit rating, never miss a payment, and always negotiate your personal loans and mortgages to gain the lowest interest rate possible to reduce the overall cost of your loan or mortgage. It is amazing how much money you will save over the long term.