Low Maintenance Debt Consolidation Loans.

June 23, 2008

Debt consolidation is the process of combining different loans (they may be of different types, with different balances, from different banks, with different terms, and with different Variable Percentage Rates or VPR) into a single loan.  This requires applying for a new loan, using the  funds obtained from that loan to pay off the existing loans and then maintaining (i.e. keeping payments current) on the new loan.

 

Some would say debt consolidation involves too much work.  It means tons of paperwork, negotiations, credit checks, and all other things that applying for a loan requires.  Debt consolidation, furthermore, requires paying debt consolidation service charges.  Are all the effort and the fees worth it?

 

Certainly; debt consolidation has many benefits.  The following are only a couple of the major ones:

 

Low Maintenance

Debt consolidation means you only have one instead of several loans.  This means easier maintenance of all your financial obligations.  Just think about it.  Which is easier:  rushing off to pay three or four separate loans monthly – all with their own due dates and minimum balance requirements – or paying only one loan each month?

 

Debt consolidation means you will no longer have any difficulty keeping track of your loan obligations.  You will no longer send a check mistakenly to Bank A when it was Bank B that needed urgent payment.  Through debt consolidation, you only need to wait for one bill and mark one due date on your calendar.

 

Better Budgeting and Planning

Isn’t it difficult to stick to your budget when bills are always due?  If you have several loans, you are probably dealing with multiple due dates.  Perhaps one loan is due in the first week, another in the next, yet another in the third week, and one more in the last week.  Meanwhile, your monthly salary only comes once or twice a month.

 

How then will you be able to pay off those bills that come too early (before your salary arrives) and those bills that come too late (when all your salary has been used up)?  In this scenario, it will seem like you’re doing nothing but pay your bills; you will probably be even wary of using your money for other necessary expenses because you’re afraid you’ll run out of money by the time your next loan bills come.

 

If you consolidate your debts, you will only have one due date.  Every month, you know that you need to pay “this and that” amount by “this and that” date.  Since you need to make only one payment each month – and since you have a fair idea about how much the payment is going to be – it will be much easier to put aside a fixed amount of money for debt servicing and thus free the rest of your money for other necessary spending

 

 

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How To Choose A Good Debt Consolidation Loan

June 19, 2008

Once you have decided on debt consolidation, you now have to choose your debt consolidation loan product.  You have many choices, but not all of them will suit your purposes.  Therefore, you must carefully check each one of your options and consider the following factors before you choose the debt consolidation loan for you.

 

Interest Rate

Naturally, you have to find out what interest rate you will be charged by a certain debt consolidation loan.  If you are going to consolidate your existing loans, then you’d better find a loan that charges a lower interest than any of your current loans.  It doesn’t make sense to transfer your balance from a low-interest loan to a higher- interest loan, does it?

 

Apart from looking at the standard variable percentage rate (VPR), you also have to check the promotional VPR.  Most loan companies offer introductory loan interest rates to entice people into applying for a loan.  These introductory loans are precisely that – they will last only for a certain period of time.  Therefore, be careful about signing up for a debt consolidation loan that has very good introductory rates  yet have higher than average VPR afterwards.

 

Repayment Terms

When does the loan have to be paid in full, and how much minimum payment do you need to cough up every month?  These are the two most pertinent questions that you need to ask before you take up any debt consolidation offer.

 

Theoretically,  a loan with a short repayment period typically means greater savings since you won’t spend decades paying interest.  However, you also need to be realistic.  If you take out a short-term loan and miss out on a payment because the monthly minimum dues are too high and are much more than you can possibly pay, then your interest rates will soar when you default on a payment.  You will lose out more in the long run.

 

 So , before you take out a debt consolidation loan, make sure that the terms are manageable and attainable given the current state of your finances.

 

Credit Limit or Face Value

How much money will be lent to you? If you’re taking out a line of credit for debt consolidation, how much credit will be extended to you?  It is important that you know from the start if the amount of money the bank will lend you for debt consolidation is enough to cover all of your existing loans.  Otherwise, you will not succeed in consolidating all your multiple loan balances into one.


Don’t Get Into A Debt Dilemma – Mistake 2 of 3

June 10, 2008

Mistake 2: Consolidate then Splurge

 

Mistake #2 is considerably worse than the one prior because you actively contribute (to the detriment) of your debts. Again, this stems from the idea that debt consolidation schemes magically hold off your debts for indeterminate amounts of time, or even eliminate them completely.

 

The leeway afforded to you by a debt consolidation plan should be used for working towards cutting down the debts, not adding to them.

 

You can hardly call a spending spree ‘cutting down,’ especially when you’re in so much debt already. This pattern of getting yourself into more debt right after promising to pay off your previous ones will, in the long and short run, work to the detriment of your budget, your finances and your credit rating.

 

Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to: http://www.globalproperty.co.za


Don’t Get Into A Debt Dilemma – Mistake 1 of 3

June 9, 2008

Debt consolidation can seem like a breath of fresh air, especially if you’ve been dogged by your debt and credit problems for a long time. Your creditors are suddenly off your tail, you have a credit rating to speak of again and you can breathe a sigh of relief.

 

But this sense of security may very well be false, particularly if you commit three common mistakes made by many who choose to consolidate their debts. You’d best avoid those same mistakes else you’re likely to find yourself running through the whole cycle of indebtedness all over again.

 

Mistake 1: No Plan at All

 

It might sound ridiculous but many have participated into a debt consolidation scheme without any sort of idea for getting rid of that debt eventually. It’s very foolish to enter a debt consolidation scheme without a concrete action plan for reducing and gradually eliminating your debts.

 

Remember, debt consolidation schemes merely give you some leeway when it comes to deadlines for paying off your debts, but they don’t hold off debts indefinitely.

 

Consolidation schemes still have deadlines for paying your bills that you must eventually meet. To make matters worse, your consolidated debts accrue interest and other fees the longer they’re left stagnant, so you’d best not forget about them.

 

Zulika van Heerden provides valuable information on her site on how to live a debt free life.
To read more tips and techniques like the ones in this article go to: http://www.globalproperty.co.za


The Basics of Responsible Credit Card Use

June 4, 2008

Credit cards can be beneficial for individuals who understand and practice the basics of responsible use of credit. However, people who don’t use this kind credit wisely can find themselves deeply in debt very quickly. Everyone who uses credit needs to understand how to use it in an intelligent manner.

Do Not Accept Every Offer That You Get

If you have good credit, you probably receive a number of offers in the mail every week encouraging you to incur more debt. The fact that a lender is offering you an opportunity to get another credit card does not mean that you actually need one. If you have too many credit cards, you may find yourself running up balances on multiple cards, which can be very dangerous to your financial well being.

Most people should not have more than two credit cards. Many people get one card for day-to-day purchases, and have a second card that they use strictly for emergencies. Individuals who own companies or who make up-front payments for job-related travel sometimes need a third card so they can easily keep track of which purchases are business and which are personal.

Do Not Purchase Things You Cannot Afford

If you are spending more money than you earn each month with the help of your credit cards, you are on your way to financial problems. It is okay to use credit for convenience, but you need to be certain that you can pay your balance in full each month, or within a reasonable period of time. If you are buying luxury items that you cannot pay off within a few months, you are not using your credit wisely.

Always pay more than the minimum payment on your credit accounts. If not, you will find that the quickly accruing interest on revolving credit accounts adds up very quickly, often putting you in serious financial jeopardy. Individuals who pay only the minimum payment each month quickly finds themselves much further in debt than they expected.

Be Diligent In Checking Your Credit Report

Part of being a responsible credit card user is checking your credit report at least once each year. There is, unfortunately, a very real risk of identity theft. If someone is using your identity to open credit accounts, you will find out when you look at your credit report. Many times people discover that incorrect information on their credit reports is pulling down their credit scores. Such problems can be appealed and corrected when you become aware of them.

Another reason that checking your credit report frequently is so important is that you are able to see how your current debt and payment habits are impacting your credit history. This can be a real eye-opener regarding the importance of paying all bills in a timely manner.

Recognize The Need For Help

Another aspect of responsibility is the maturity to recognize when help is needed. If your spending is out of control, ignoring the problem will not make it go away. Seek assistance from a trustworthy credit counsellor who can help you come up with workable solutions to your credit problems. If you are having credit troubles, the sooner you seek help, the faster you can be on the road to rebuilding your credit.

Zulika van Heerden provides valuable information on her site on how to live a debt free life. To read more tips and techniques like the ones in this article go to: http://www.globalproperty.co.za


Debt Consolidation can Save Your Credit Record

May 26, 2008

 
An important feature of consolidating bills is that it helps your credit record.
As you accumulate more and more debt, you damage your credit record. If you have missed payments or carry excessive credit card debt, your credit score suffers.
When you consolidate your accounts and pay off your outstanding debts, you stop the damage being done to your credit. You show accounts that are paid off which helps with repairing your credit.
So how does that benefit you?
A better credit score means lower interest rates in the future for things like a mortgage, car loan or home refinancing. In the long run, it can save you thousands (maybe tens of thousands) of Rands

 

 

 


What is the Key for Getting out of Debt?

May 23, 2008

Always make a monthly budget for yourself, if possible do it weekly or even daily; being financially organized is the key to success.

You must include details in your budget. Add foods, bills, entertainment, transportation, shopping, miscellaneous and other and this way you will see how much you really need to spend and which is higher in priority… If you can make changes to your way of life and save some money, do so. Use that money to pay back debts and in the meantime you should stop adding to your borrowing by surviving only on cash or debit cards.

Are you a student? An employee? Bring everything with you to school/university or to work. Have your lunch, snacks and even your drink. It is better then buying from machine.

You will save even with small amount but you are SAVING.

Instead of saying that something only costs R8 for example, say if I don’t buy it that is R8 that I can put away for a rainy day or put toward debt.

 

Look at your monthly income based on the net amount. Deduct taxes, medical, UIF etc… and you will have the net income.If you are in debt, it is a given that you are spending more money than you make. You are in the red. There is no way to play games about it.

 

 

Live within your means. If you can’t afford to pay cash, you can’t afford to have it.

 

For more information on Debt Consolidation and Mortgages, go to www.globalproperty.co.za