Eligibility and Benefits of Debt Consolidation

viraj-kesarDebt consolidation means taking one loan to pay off others. In the recent times we have seen a number of people losing jobs or fearing the risk of losing jobs. Thus imposing financial constraints on one’s day to day life is very important. Proper finance management is very crucial. Debt consolidation is considered one of the ways to mange burdens rather than letting all the loans scattered, with more than one and two or even more repayments to manage monthly.

It is common to have a car loan, housing loan, student loan, credit card loan etc all at a single time. Most people do most of their shopping’s using credit card. It is really easier. But all that is easy and comfortable comes with a heavy price! Credit card loans have a huge interest rate that is sometimes even more than an unsecured loan.

Banking and financial institutions offer to help these heavily in debt individuals, by taking up their entire debt and merging them to one. Thus you are only liable to a single lender which is of a great psychological relief, than owing many. A debt consolidation management company usually hires a professional, who analyzes the debts and deals with the respective firms to waive off your interest and reduce your outstanding sum. Thus you
get a relief of due sum to be paid.

There are a few pre-requisites that are necessary to be eligible for debt consolidation
debt-consolidationYou have to have a steady income, and must submit proof for the same. Being an employee ensures that you can repay the consolidated loan.

Your credit score needs to be good. Someone who has not faulted their repayment wins better trust and a higher chance to be approved for a debt consolidation loan.

If you have a working spouse, the credit history of the spouse is also considered
Debt consolidation is especially useful when you have multiple loans causing stress and sleep less nights. Multiple loans mean multiple interests. A debt consolidation loan that you take can be secured or even an unsecured loan. A secured gives you the benefit of having to enjoy a lower interest rate. Though cases of non-secured loan is not very common, you can apply if you have a high income job, and you convince the debt management company that you can manage to pay off this unsecured loan.

Creative Way to Get Rid Of Debts

viraj-kesarIf you are like many in today’s economic climate and are drowning in credit card and other debt and feel that no matter what you do it will never be at reasonable levels, then the time has come to get a little more creative in dealing with that debt.

There are ways to beat debt, especially credit card debt down that is quicker and more efficient than just paying the minimum balances every month. Quite obviously, the number one way is to pay more than the minimum amount necessary each month to beat it down quicker. While this is a great idea it will still usually take you a substantial amount of time to eradicate that debt if the balance is very high.

Another way to accomplish this goal is do what is coined as “snowballing” your credit card debt. What this entails is taking a debt load from one card and transferring it to the card with the lowest possible interest debt consolidation torontorate. Then, as you pay the minimum balances on all other cards you work as hard as possible to pay off the one with the highest rate until it is zero balance.

Then you start on the next card and again make minimum payments on all others as you “snowball” or aggressively pay off that card and then again move to the next. As the cards start to get paid off you will have more funds available to pay off the next one in essence gathering momentum hence the term “snowballing”.

You can also take advantage of any low interest promotional rates that are periodically offered by card companies. Even if the introductory rate is only for a year, you can make substantial gains and save a boatload of money in that period.

Other ideas for wiping out debt involve using other cash streams to apply to the debt even if it seems counterproductive. In certain cases it would make more sense to cash in investments or even use savings to pay off debt especially if the interest rate of the debt is substantially higher than what you are getting in return for those saving or investments.

debtsDoes it make sense to carry debt at a rate of 18% and have savings that are only offering only a fraction of that? In a sense by paying off that debt you are getting that rate of return on your money albeit it a slightly different way. The same idea would exist if you have an insurance policy that you are able to borrow against. The rate you will pay will be a fraction of the credit card rate saving you money in the long run.

As you can see, there are a wide variety of creative ways to finally off load that credit card debt. Use your imagination and do your best to beat it down and then implement planning to avoid building it back up again.

Teach Your Partner About Finances

viraj-kesarIn most situations, only one person is responsible for managing the household finances, but it can lead to a very difficult financial situation if that person passes away or becomes incapable of managing the budget anymore.

Teaching your partner about household finances is important not just to prepare for any future accident but also to share the burden and responsibilities. Here’s how you can teach them about household finances.

Make a List of Everything
These things almost always start with making a list, and that explains the importance of lists. Don’t assume that your significant other is aware of where you keep all the sensitive information. You may think that your filing system is well-organized or that your financial records are in an obvious and accessible location, but your partner may not be aware of them. If you manage some of your finances online, the chances are that some of the financial information is just in your memory and not in printed form. A list of all the accounts will make it easy for your beloved partner to see everything involved that needs to be addressed.

Give Them Access to Everything
consolidate debt in Las VegasYour partner should be able and ready to take charge, and that’s why just the knowledge of the existence of these accounts is not enough. You’ll need to give them full access. Provide them with a set of keys to the safety deposit boxes and share the code to your safe with your partner. Name them as the primary beneficiary or an account holder of all your accounts, life insurance policies, and every property you own. Make sure they know how to access online accounts and are able to understand at least the most basic of financial terms. Explain to them the importance of everything and motivate them to ask questions on what they don’t understand.

Maintain a Household Budget Together
Managing a household budget together can be a great way to develop mutual understanding on financial matters and to bring your partner up to speed on various aspects of the modern financial world. Using the budget, you can teach your partner about managing income, paying debts, taking care of recurring expenses, handling investments and insurance policies and so on. It also means they can handle or take over the finances in your absence.

Give Them Financial Responsibility
consolidatedebtStart by giving them small, manageable tasks with low stakes and gradually, increase their financial responsibility. You can start by making your partner pay a small bill and gradually increase the task based on the responsibility involved. Later on, have your partner take care of all the finances for a month as you supervise.

Encourage Their Growth and Education
Your partner may not be able to pick all of it quickly and there will be some mistakes involved, but try to encourage their education. Remember that they are going through a learning curve that will end up being beneficial for both of you in the long term.