25 Jan

Debt Consolidation - How To

So, you’ve decided to manage your debts, good move. Now all that is left to do is to find out how to go about it. The first step is to first work out how much you need in order to make consolidating a viable option. If you’re consolidating credit cards, document how much is owed on each plus the interest that is due until the end of the month. Do this for all cards you’re looking to consolidate. If you’re consolidating personal loans, work out the total amount outstanding on the loan. This is likely to be an entirely different figure to the figure you see on your bank statement or online banking. Often these figures include the interest due for the entire loan period. You’ll need to call your bank and ask for settlement figure. Once you have this, make a note of that also. Keep in mind that both personal loan providers and credit card providers may have hidden / included insurance fees or charges that will also need to be deducted or added respectively. Once you have all these figures, you’ll then have the figure you need in order to be able to consolidate.

Now, this is where it can get tough. If the amount is relatively low, you might just be able to apply for a standard personal or secured loan for the full amount, get the funds and clear the debt. That simple. However, if the debt is high, you’re going to have problems getting a loan for such a significant amount. If all of your debt is with one lender and you tell them that the loan purpose is for consolidation, you will most probably get the loan. If your debts are split up over different lenders, you will need to go to a specialist third party debt consolidation company. These firms are often extremely accommodating but the interest rate is normally slightly higher than a personal or secured loan due to the circumstances.

Filed Under: Debt Consolidation

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15 Jan

Debt Management - How To

The first step to being able to manage your debt effectively is to work out what debt you owe, to who and the payment terms. You need to sit down and work out how much you owe to each lender be it your bank, credit card company or private lender. You then need to work out how much you’re paying back each month to each lender and on what terms i.e. are you paying back a personal loan over 5 years and are you paying the minimum amount due on your credit cards, or more. As well as this information, you should also work out and document what the interest rates are for each borrowed amount and if possible, work out how much each loan or credit card is costing you in interest over a 12 year period. This will come in handy later for deciding which debt to focus on clearing first.

One you have all of the above figures together, you then need to work out your other finances, work out what you need to pay each month for your rent and general living expenses leaving the full and maximum figure that you can devote to clearing your debts each month. Now that you have both of these figures, you can start to manage your debt effectively. If you can make all of the minimum payments on your credit cards and service your personal loans, it’s a good start. If that’s the case, forget about the personal loan for now and concentrate on your credit cards. These I imagine will be the highest interest and what we need to focus on first. If you have funds spare after calculating the above payments, you need to throw 100% of them at your highest interest credit card with a view of clearing that first. Once that is cleared, pay off the next one and then finally your loan. Do not make the mistake of paying a bit of each every month. This won’t get you out of debt. You need to target them one at a time.