|
Debt Consolidation Loans-Yes or No Debt Consolidation Loans: Yes or No?
A multitude of small monthly payments can add up to very big trouble. Before you know how it happened, you can suddenly have more payments going out than you have income coming in every month.
You aren't alone. It happens to a lot of people.
On the upside of debt consolidation loans, all debt is included. In debt management agreements, only unsecured debt is considered (credit cards). But in a debt consolidation loan, all debt is considered...secured debt as well as unsecured debt.
On the downside of debt consolidation loans, these loans are almost always second mortgages. In a nutshell...you really are betting the farm (the house) that you can meet the monthly payments every month until the consolidation loan is paid off.
With debt management agreements, even if it comes to the point where you must declare bankruptcy, this is still unsecured debt. Courts can set it aside. When you make a debt consolidation loan in the form of a second mortgage, this debt that was once unsecured now becomes secured. If it comes to the point where you must declare bankruptcy, your home can be foreclosed upon to satisfy debtors.
This point should not be taken lightly. Your home and the equity that you are establishing in it is your largest single asset. The mortgage on your home is usually also your largest monthly payment.
The low monthly payment that is promised with a debt consolidation loan is not always because the interest rate is lower. Sometimes it is because the debt payments have been extended for many additional years instead. Second mortgages can be as long as 30 years, and remember that you have bet the house that you could make every single one of those payments in full and on time.
See Also:
Manage Your Debts Successfully | Karla Van Huysen .com
| Responsible Debt Management Debt Management Experts
People who work as debt management experts go to school for that sort of thing. Many spend four years or more getting college degrees that identify them as experts in the money and debt management fields. And they are experts, there's no doubt about it.
The best of the debt management experts and debt management teachers, however, are those who have learned to manage their personal finances and their personal debts, and then passed that knowledge along to their children.
Those who actually do it are the experts, and they are the ones that we need to learn from to avoid having to visit with a well-educated debt management expert because we have gotten ourselves into financial hot water.
As I look around at expert debt managers (those who successfully manage their own finances) I find that they have many things in common. They don't all do things exactly the same way, of course, but the structure in which they manage their finances is basically the same.
1. They save first. Those people who know how to save very rarely get into financial trouble. Sure, they can. Life can throw some pretty hard curve balls....the loss of a job or a major illness. But unless their financial trouble is caused by an outside force they will not get themselves in debt up to their eyeballs.
2. They live within their means. They do not base their spending upon what their friends have. The neighbors might buy a new car, but that will have no bearing upon whether they do or not.
3. They all have budgets. Not only do they have budgets, but they live within the constraints of that budget. They do not make impulse buys. If asked, they could tell you how much is spent each month on food, shelter, clothing, utilities, and transportation. |
|
More articles:
Debt Management - Getting the Priorities Straight
Carnival of Debt Management #39
Student Loan Debt Consolidation
Consumer Credit Counseling Services - Many are Sca
Consumer Credit Counseling Service :: Debt Management Services ...
| The Right Answer for Debt Management Easy Credit and Debt Management
Before credit cards came into existence (and, yes, there was a world without credit cards at one time) it was a lot more difficult for people to get in over their heads financially. It happened, of course, but not with nearly the frequency that it happens in the credit card laden world of today.
People really didn't have the ability in the form of a credit card to get so deeply in debt that they couldnt get out. Loans had to be approved by other living people. Credit histories were checked and employment was verified before credit was extended.
Credit cards have made getting credit very, very easy, and that easy credit is getting a lot of people into serious financial difficulty. If a person has a social security number, they can get a credit card. In fact, I'm not certain that even a social security number is necessary -- maybe just a mailing address works. A man in California got a credit card for his dog and used nine zeros as a social security number.
Having a credit card is not a badge of honor. It doesn't assure the world that a person is financially responsible and that they pay their debts on time and in full each month.
Managing debt means being financially responsible. We live in a world where instant gratification is the expected norm. See it, want it, buy it...with a credit card. The problem is that it wasn't bought; it was charged, and the bill will come due. Buy it now, worry about paying for it later seems to be the mantra of the nation today.
Credit cards are the vehicle that is used to drive into deep and unrelenting debt. That easy credit is the root cause of second, third, and final notices filling mailboxes, and it provides jobs for debt collectors who will be calling day and night. |
Related Topics: Online Debt Consolidation and Debt Management Services,
Debt Management-Getting the Picture, Debt Management and Credit Scores
|