Out of all the techniques to make your money go further I think one that seems to be getting the most attention is debt consolidation, but is it the best way to go about it and if so, how does it work?
Debt Consolidation is a simple concept; you find a company that will help you combine some of your credit card debt into one bigger loan. This allows you to only have one payment and the interest rate is usually lower. If it's not a lower interest rate, you are only paying the interest on one loan instead of several smaller credit cards or debts.
Here are some things to consider when approaching Debt consolidation:
1. As with all types of financial arrangements make sure you carefully read all the fine
print of any contract you are signing. Never, ever just sign based on what you were told. Make sure that the actual written contract spells out the exact terms of your new payment, interest rate, due date and the loan term. If you aren't sure of something ask for a clarification and if the contract is overly long and complicated don't hesitate to run it by an attorney first. Legalshield is a great provider for this services. I know this may sound like overkill but you don't want to make things worse by signing a contract with a company who isn't honest and ethical.
2. Always check with the Better Business Bureau to see if any complaints have been filed with the company you are considering for your loan consolidation. This is a valuable resource if you are not competing the consolidation with your local bank. Although, online testimonials and referrals from friends are great too, but checking with the BBB can give you an even broader idea of how well the company has been doing and how honest they are in their dealings with their customers.
Overall you just want to make sure that you know exactly what, if any, impact that this consolidation will have on your financial picture. In my experience most consolidations average at 5 year term and do not actually prevent you from running up your debt again. Yes this method will help with paying off debts, but it will create another larger bill. And it may not provide the big credit boost you may seek. It is a balancing act that you need to carefully consider before you make this decision.
Debt consolidating to save money is a great option for many people and it may be the best course of action for your specific goals . Just remember that if you have excessive late pays or are delinquent you may have a higher rate and could possibly be denied.
Until Next Time