personal debt tips

Expert personal debt tips to guide you with your money.

Loans and Debt Balance

Balancing you loans and your debt is a difficult and it's easy to get behind on debt loans. Assess your debt situation and make some changes to move forward. Often the decisions can be tough. You may need to downsize your apartment or condo or find a roommate. You may need to trade in your expensive car for one that is more economical. You may need to change your shopping or dining habits help balance debt situation. First, order a copy of your credit report and compile a list of your debts and your monthly payments. Spending is like any addiction – you need to acknowledge the problem and then you can start on your way to recovery.

Finding Debt Consolidation Loans

Loans, like credit cards, can get overwhelming if you have numerous ones. Different interest rates, due dates, amounts and lenders can create situations where you miss payments or pay too much interest. Eliminate the confusion by consolidating your debt into a single, lower interest rate loan. One payment, one lender, one interest rate – makes everything simpler. Then work on changing your spending habits so you can maintain this cleaner debt loan situation.

Borrowing Debt Consolidation Home Equity Loans

A home equity loan can be a great solution whether you have credit card debt, personal loans, high interest car loans or other debt loans. It all depends on the interest rate. If you can get the amount you need at the right interest rate, a home equity loan can truly save you time and money. If you can't cover your debts, or you can't get an interest rate that is lower than what you’re currently paying, consider another option. Shop around to make sure you are paying the lowest closing costs and interest rate possible.

Securing Loans for Debt Consolidation

Consider what makes you desirable as a borrower - it will make a difference as to the amount and interest rate you can secure:

  1. Security - What assets do you have that can secure your debt consolidation loan? A home? A car? An art collection? Lenders prefer to lend money to people with assets.
  2. Debt to Income Ratio - How much debt do you have? A lender is less likely to give you a loan if your debt to income ration is too high -- unless it's specifically for debt consolidation.
  3. Credit - How is your credit score? Do you make payments on time? The higher your credit score, the more likely you are to get a debt consolidation loan.

Fixed Rates for Bad Debt Loans – The Answer

Variable interest can be a dangerous thing. If you have a credit card that starts with a 0% interest rate and then creeps up on you, or if you have a 5 year ARM mortgage or home equity loan, it is critical to watch your rates closely. Look for fixed rate debt loans at reasonable interest rates because the stability of these payments will help you effectively get control of your debt. Keeping track of multiple variable interest rate loans can easily get overwhelming. When it comes to debt loans, remember the KIS principle - Keep it Simple!

Comparing Debt Consolidation Loans

Shop around and get quotes – then, make sure that you're comparing apples to apples. First - who are you borrowing from? Is it a traditional lender or one who is considered second tier? Is it a large bank or a smaller one? Second, what are the terms of the loan? Is it a 5 year, 10 year or 30 year loan? How do the monthly payments work? Is there a prepayment penalty? What is the interest rate? Is it higher or lower than you wanted to pay? Is it fixed or variable? When you review all of these things on your loan comparison chart, you should be able to get a feel confident of the best offer with the least risk.

Pay Off Debt Consolidation Home Equity Loans Quicker

Use a home equity line of credit wisely! If you get home equity to pay off loans, pay off the loans and don't use the money for a boat, a car or something frivolous. There are a few ways to truly get ahead of the game. First, calculate the savings you are realizing from consolidating your debt and pay as much as possible towards your debt consolidation loan. By paying extra money on your home equity line, you are reinvesting in your future and making sure that you don't lose when you sell your home by having a low return on investment. Use your credit cards for emergencies only. Don't buy food, extras or spontaneous purchases with your credit or with money from your consolidation loan. Finally, pay attention to your interest rates. Spend the least amount of money for debt as possible.