Debt Consolidation is one of the easiest ways to save money.
Debt consolidation is a method of combining several small “bad” debts into one (or a few) more credible loans. On the surface, this sounds like a great idea: paying off numerous high interest loans with one of low interest. No more credit card debt? Not exactly. The low interest consolidated loan is usually spread out over a very long term, resulting in the payment of more money in the long term.
Long term, line-of-credit type loans like this have other problems, too. Since they tend to be given by larger, risk-averse institutions they are difficult or impossible to find without collateral. This means that you will have to secure it against your house, limiting your long term flexibility and harming your credit score.
The only time when this is an advisable option is when considering credit card or payday loan debt. With interest rates reaching 500% on some payday loans, this type of toxic debt should be eliminated using any means.
Other than the extreme cases where loans cannot be obtained, an easier option is to use the Debt-Snowball method.
Debt Snowball Method:
1. Arrange your debts in order from highest to lowest amounts. 2. If two are very similar in amounts, put the one with higher interest higher on the list. 3. Begin paying off debts highest on the list first (i.e. those of the lowest numerical amount). This will enable you to decrease the total increase that you’re paying and, within a short time, be paying down only a few larger and more long term debts.
We have helped several clients to reduce their debt level through the use of the debt-snowball method. It is a brilliant way to reduce debt as it provides a structure to be followed and a consistent goal which we can strive for. It doesn’t always work, though I’m afraid. A better method may be to consider debt consolidation. By rolling your debts into one, less toxic debt you can save thousands of dollars per year. It’s a simple method to reduce the amount of money you are throwing away at the banks. If you have payday loans, credit card debt, or money owed to the “wrong” people, consolidated debt is an excellent option for you. We can help you to obtain one large loan at a low interest rate. You can use this money to pay off your smaller more toxic loans and begin getting your finances back on track. See our main page for other clients who have used this method to great success.
In Texas we think that we are untouchable. The Texas way is to plow through our obstacles, but when you are deep in debt this may not be the best way for you. If you are in deep debt and need help, contact us. We can help you just like we’ve helped so many others.