Cutting costs for debt reduction
0 Comments Published by bill hilton on Friday, August 18, 2006 at 3:05 PM.
Turning yourself around when you're deep in debt isn't easy. As we've seen in previous posts, planning a debt consolidation program (carefully!) is the best way to put yourself on the road to recovery. However, consolidating is only the cure for the symptoms - you have to address the cause of your debt: overspending.
If you're in debt it's because you're living beyond your means. However, reducing expenditure doesn't necessarily mean making huge reductions in your standard of living. Sure, you need to spend less on "luxury" items like electronics and designer clothes. But you can go a long way to reducing debt by taking a few simple measures:
When you're grocery shopping, take advantage of two-for-one deals and special offers. Make an effort to eat healthily - wholefoods are much cheaper than processed ones.
Drive your car efficiently, reducing fuel costs - more advice on that here,
Save on bills by turning off lights when you're not in a room and not leaving the TV running and other appliances on standby.
Rather than cranking up the heating, wear warm clothes!
Take holidays and breaks closer to home.
All these are relatively minor savings, but if you add them up over a period of months and years you can save a massive amount of money - thousands of dollars. Combining them with a good debt consolidation loan and you can begin to cut your debts fast. Remember, you probably built up your debts by overspending little-by-little over a period of time. Beat them the same way!
If you're in debt it's because you're living beyond your means. However, reducing expenditure doesn't necessarily mean making huge reductions in your standard of living. Sure, you need to spend less on "luxury" items like electronics and designer clothes. But you can go a long way to reducing debt by taking a few simple measures:
All these are relatively minor savings, but if you add them up over a period of months and years you can save a massive amount of money - thousands of dollars. Combining them with a good debt consolidation loan and you can begin to cut your debts fast. Remember, you probably built up your debts by overspending little-by-little over a period of time. Beat them the same way!
Debt consolidation loan interest calculator
0 Comments Published by bill hilton on Wednesday, August 16, 2006 at 2:41 AM.
I've just been scouting around the web in search of a really reliable and usable interest calculator. Most of the ones are based on you entering the loan capital and the amount you wish to pay a month, plus the interest rate, to work out how long it will take you to pay off your consolidation loan.
That's fine, but the majority of consolidation loans are based on a fixed term. There's a really good fixed term calculator here. This is useful because you can work out the exact savings you'll make comparing different repayment periods and varying interest rates.
As we've said before, the secret to successful debt management is to do a lot of detailed research and choose exactly the right deal from the best-value debt consolidator you can find. It might seem like hard work, but the extra hours of work can save you hundreds of dollars.
That's fine, but the majority of consolidation loans are based on a fixed term. There's a really good fixed term calculator here. This is useful because you can work out the exact savings you'll make comparing different repayment periods and varying interest rates.
As we've said before, the secret to successful debt management is to do a lot of detailed research and choose exactly the right deal from the best-value debt consolidator you can find. It might seem like hard work, but the extra hours of work can save you hundreds of dollars.
Consolidation on a credit card
0 Comments Published by bill hilton on Saturday, August 12, 2006 at 2:21 PM.
If you have a lot of self-discipline - and I mean a lot - you can consolidate your debts on to a credit card and save a lot of money in interest payments.
Surely that's crazy? Surely credit cards have the worst interest rates of all? Well, yes, they do. But, once again, if you're in debt you can take advantage of the intense competition that exists between providers in the financial services industry. In the last post we looked at methods of debt consolidation by doing a lot of research into the best deals in the marketplace, and saw that a small difference in consolidator interest rates can make a big difference to what you pay back.
Using 0% credit card deals is even better, if you can discipline yourself to manage it properly. It tends not to work for really huge debts or for people with poor credit ratings, because it involves applying for new cards.
"Hold on," you're saying, "this is just getting worse. I'm already in debt, the last thing I need are new cards!"
Bear with me. These days many credit cards come with an introductory offer of 0% on balance transfers for nine months or a year. There is a fee for this - typically 2% of the transferred amount - but it's much less than you would be paying. If you can consolidate your debts on to one card you can transfer this balance to a 0% interest scheme.
To make this work, you must:
1. Not get into further debt, especially by spending on your 0% card.
2. Make regular payments - get your bank to automate this.
3. Remember to switch to another 0% deal when the interest-free period has expired. When they offer the 0% deals the card companies are gambling on you forgetting to do this. You musn't.
So, a cool method of debt consolidation, and, if you have a sufficiently good credit rating to pull it off, the cheapest. But you need to be disciplined and plan ahead!
Surely that's crazy? Surely credit cards have the worst interest rates of all? Well, yes, they do. But, once again, if you're in debt you can take advantage of the intense competition that exists between providers in the financial services industry. In the last post we looked at methods of debt consolidation by doing a lot of research into the best deals in the marketplace, and saw that a small difference in consolidator interest rates can make a big difference to what you pay back.
Using 0% credit card deals is even better, if you can discipline yourself to manage it properly. It tends not to work for really huge debts or for people with poor credit ratings, because it involves applying for new cards.
"Hold on," you're saying, "this is just getting worse. I'm already in debt, the last thing I need are new cards!"
Bear with me. These days many credit cards come with an introductory offer of 0% on balance transfers for nine months or a year. There is a fee for this - typically 2% of the transferred amount - but it's much less than you would be paying. If you can consolidate your debts on to one card you can transfer this balance to a 0% interest scheme.
To make this work, you must:
1. Not get into further debt, especially by spending on your 0% card.
2. Make regular payments - get your bank to automate this.
3. Remember to switch to another 0% deal when the interest-free period has expired. When they offer the 0% deals the card companies are gambling on you forgetting to do this. You musn't.
So, a cool method of debt consolidation, and, if you have a sufficiently good credit rating to pull it off, the cheapest. But you need to be disciplined and plan ahead!
How to consolidate debts - 5 easy steps
0 Comments Published by bill hilton on Monday, August 07, 2006 at 1:52 PM.
Because consumer debt is rising so fast, consolidation companies are slashing their interest rates to attract new business. You could say there's never been a better time to be in debt, because it the past you would never had the chance to choose from so many great deals to consolidate debts.
Consolidation is a simple process, but it's not the end of your debt problem: it will simply move all your debts 'under one roof'. The interest rate you pay will probably be lower than the average rate you were paying when you had your debts distributed among several lenders - however, if you have a poor credit history or no home against which to secure your consolidation loan the rate may still be high.
OK: here we go with the five easy steps to debt consolidation:
1. Hunt around for the best possible consolidation deal. As we've seen, the market is intensely competitive. If much of your debt is on credit cards (average APR 14-17%) then you should be able to cut the interest rate by at least a fourth, and maybe as much as a half or more, depending on your personal circumstances. It really pays to shop around. It may not seem worth checking out loads of different debt consolidation companies simply to shave an extra half a percent of your interest rate, but it is - an extra half percent reduction on a debt of $50,000 represents a saving of more than $700 over five years.
2. Commit to as tight a time frame as you can. Paying off your $50,000 over five years rather than ten years will save a lot of money in interest payments.
3. Don't "cash out" the consolidation loan, adding a couple of thousand dollars to it as it starts just to give yourself some spending money - it's still not your cash, and it still needs paying back!
4. Commit to a repayment schedule you can afford, but don't be too laid back: it's in the interest of the debt consolidator to get you to commit to as long as period as possible. Balance this against your ability to pay.
5. Once a debt consolidation deal is fixed up you'll have a big load off your mind - the amount of creditors on your back will have reduced to one, and you may have saved your credit rating. Don't celebrate by getting into more debt!
Consolidation is a simple process, but it's not the end of your debt problem: it will simply move all your debts 'under one roof'. The interest rate you pay will probably be lower than the average rate you were paying when you had your debts distributed among several lenders - however, if you have a poor credit history or no home against which to secure your consolidation loan the rate may still be high.
OK: here we go with the five easy steps to debt consolidation:
1. Hunt around for the best possible consolidation deal. As we've seen, the market is intensely competitive. If much of your debt is on credit cards (average APR 14-17%) then you should be able to cut the interest rate by at least a fourth, and maybe as much as a half or more, depending on your personal circumstances. It really pays to shop around. It may not seem worth checking out loads of different debt consolidation companies simply to shave an extra half a percent of your interest rate, but it is - an extra half percent reduction on a debt of $50,000 represents a saving of more than $700 over five years.
2. Commit to as tight a time frame as you can. Paying off your $50,000 over five years rather than ten years will save a lot of money in interest payments.
3. Don't "cash out" the consolidation loan, adding a couple of thousand dollars to it as it starts just to give yourself some spending money - it's still not your cash, and it still needs paying back!
4. Commit to a repayment schedule you can afford, but don't be too laid back: it's in the interest of the debt consolidator to get you to commit to as long as period as possible. Balance this against your ability to pay.
5. Once a debt consolidation deal is fixed up you'll have a big load off your mind - the amount of creditors on your back will have reduced to one, and you may have saved your credit rating. Don't celebrate by getting into more debt!
