Be Debt Free » 2009

Archive for November, 2009

My Guide to Credit Card Debt Elimination

Monday, November 16th, 2009

Uchenna Ani-Okoye

Taking a step towards credit card debt elimination, so you have decided to go for credit card debt elimination and are wondering on what the methods for credit card debt elimination are. As they say, let’s take the bull by its horns and lay it all flat on the ground. There are generally 2 recommendations that are most common for credit card debt elimination: controlling the expenditures and consolidating debt. Let’s check both of these credit card debt elimination recommendations and check the list of things that you can do for achieving credit card debt elimination using these recommendations:

1. Control your urge to spend: The first thing to do for credit card debt elimination is to control your expenditures. Here we are talking about the payments you make using your credit card. Remember that the main reason being you’re getting into credit card debt is uncontrolled expenditures using your credit card. So if you are really serious about credit card debt elimination, this is one thing that will help in credit card debt elimination by preventing accumulation of further debt. Here is what you can do to control your expenditures:

a. You need to stay away from attractive offers that are put-up by various shops and stores. Don’t buy anything that you don’t really-really need. After all you are looking for credit card debt elimination not supplementation.

b. Leave your credit card at home. If you really-really need something, then you can fetch your credit card from your house. This will prevent you from yielding to the too-attractive-to-resist sale offers (that are actually there all the year round). This credit card debt elimination technique, again, works on the principal of ‘prevention is better than cure’. This will prevent unplanned expenses from happening.

c. Prepare a monthly budget and stick to it. This is really a very important credit card debt elimination measure. This budget will form the basis of your credit card debt elimination plan. So if you deviate from your budget, your credit card debt elimination plan will go for a toss.

2. Debt consolidation: Debt consolidation or moving from high APR credit cards to a low APR one is generally the first step (the first reactive step) for credit card debt elimination. Here are a few things that you need to do:

a. Do not go for the first balance offer you come across. Analyse various offers and choose the one that best suits you. This will be an important thing on you credit card debt elimination plan. Initial APR, Initial APR period and standard Apr, all need to be considered.

b. Read the fine print on the balance transfer offer and check the terms and conditions on these. These might affect your overall credit card debt elimination plan.

c. Compare other benefits e.g. rebates, reward points, etc, before you actually decide to go for one of the offers.

Credit card debt elimination is about proper planning and discipline. So make your credit card debt elimination plan and stick to it.

Thomas

Posted in Debt Freedom | Comments Off

Debt in the 21st Century - Debt Settlement Help

Saturday, November 14th, 2009

Debt Settle Inc

The view of people in debt changed throughout the 20th Century. At first, it was unacceptable when turn of the century people began to buy homes however, that changed. Debt became more and more acceptable, leading up to the roaring 20’s when people were so immersed in their debt problems that the future became bleak. All these debt problems led to the Great Depression, which once again made debt a four letter word. Throughout the 30’s, 40’s and 50’s, people would only get into debt to buy a home. Heavy student loans, car loans with double digit interest rates and credit cards wouldn’t even have been considered.

However, as the 60’s began, and especially the 70’s, credit cards became more popular and people became more comfortable with debt. All of this led to the 80’s, 90’s and 2000’s where debt became a way of life, and the only way certain people were able to afford big homes, nice cars and an affluent lifestyle.

All of this bring us to the 21st century, a time when debt problems have run amok, where people are turning to bankruptcy more and more, and where people are beginning to consider debt as an evil once again. However, as most debt settlement professionals will tell you, seeing debt as an evil is a good thing. Far too many people have allowed themselves to fall deep into financial ruin because they were comfortable with tens of thousands of dollars in credit card debt and other forms of unsecured debt. Debt settlement experts work with people everyday who have forty, fifty and even sixty thousand dollars in credit card debt, debt spent on clothes, food and possessions these people don’t even own anymore.

The shame of debt problems throughout the nation, is that few people got into their debt problems by purchasing things they needed. When debt settlement experts work with people who are trying to get out of mountains of debt, they hear stories about people buying boats, second homes, wardrobes, fancy meals and other frivolous items. However, people become addicted to a lifestyle and feel empty without the ability to buy what they want when they want it. Debt becomes an addiction, a way to gratify the desire to have things. This leads to heavy debt problems, and a lifestyle of trying to own everything while not having enough to buy it.

Debt problems crush people, they wind up avoiding phone calls from lenders, not opening bills when they come and so forth. All of this leads to stress, sleepless nights and some people even get heart attacks over worrying about their debt.

So, in the 21st century, hopefully people will be able to see debt for what it is…a necessary evil. Debt allows people to buy houses, own cars and sometimes even go to school, but it should be seen as a necessary evil, not a necessary good. Hopefully, this will be a truth that people will follow throughout the century, although history isn’t on our side.

Debt negotiation company / Debt negotiation firms

Robert

Posted in Debt Freedom | Comments Off

Credit Card Debt - Watch Your Credit Report and Your Bill

Wednesday, November 11th, 2009

Christos Margetis

The credit card industry is so competitive that, whatever card you have, the chances are that somewhere out there is one that would be cheaper or better for you and you can change as often as you want! Literally billions of dollars are being used up on expenses that are only created because of the existence of the credit card industry.

A study by The UK Post Office found that a quarter of credit card holders said they had started the New Year more dependent on real credit than ever before with 41 per cent saying that they would be relying on their credit cards to pay for groceries and other daily expenses.

There are a lot of good reasons to be scared of credit cards, and not to have too many.

We live in an ‘I-want-it-now’ consumer culture, and we’re willing to pay more than we can afford to fund our lifestyles. Credit cards are called credit cards to avoid saying what they really are: debt! You will do much better in all things connected to credit cards if you always remember this simple mantra: credit cards are debt cards.

If you had bad credit, you couldn’t get a credit card at all. Once you’ve got a credit card, you’ll find that you can do more with it than just pay for things with the card. Whatever you do, though, don’t spend a whole day applying for every credit card you can find, just to see if anyone will take you.

Lot’s of people who are regular credit card users realize that debt consolidation can bring in several benefits. A loan can be taken for the sole purpose of debt consolidation and often it is at lower rate than what you might be paying to the credit card issuers. You can save money by clearing your credit card bills that might have been attracting very high interest rates. Credit cards are there to put you in debt and keep you in debt. Less than half of all the UK’s credit card users pay off their bills every month and millions are now believed to be using plastic money to pay for everyday necessities, including super market, groceries etc.

If you’re a good customer, you’d be surprised how easy it is to get a better rate.

Far more people get buried in debt because they lose their job, or get sick they take out credit cards to pay for basic expenses, and fall into the interest trap. For higher interest rates, it only gets worse: there are cards out there where only making the minimum payments will actually cause you to owe more each month, not less! Companies giving out small loans are far more likely to rely completely on this rating than to bother checking your income, and a worse rating will mean that you are offered a higher interest rate.

Your limit is just that: a limit, not a minimum! Whatever you do, don’t get a card and immediately spend your whole limit. The average family carries a balance of between 5,000 and 8,000 pounds on all their credit cards, depending on which figures you believe.

Most people don’t work this out, and feel that the payments must simply be their fault for spending too much money to begin with. To avoid being in a credit card debt try to transfer as much money as you can from the high-interest cards down the list to the lower-interest ones.

Phoning companies to ask to negotiate your debts isn’t a good idea it’s too easy to get flustered and say the wrong thing. When you have enough money to pay off your debt, there’s absolutely no reason to keep it. Debt is for people who don’t have the money, and need to borrow it. Debt costs money, and savings make money you want as much of your finances as possible to be savings, not debts. If your savings account and credit card are with the same bank, then you’re effectively paying for the privilege of borrowing your own money from them. Why would you do that?

If you’re in a really bad situation, and you just can’t even make your minimum payments this month, don’t worry. As long as there’s only one late payment, it doesn’t matter too much, especially once a year or so has gone by. Pay attention to what kind of fees you’ll be charged for a late payment, or if you take a cash advance, or if you accidentally exceed your limit on the card.

Don’t let stigmas put you off; this is about your health. People with lots of debts don’t want to talk about it, even with their family, for fear of upsetting people or looking like a failure. It is very important, though, that you do talk about your problems, as keeping it all inside yourself will make you much, much more stressed.

Your rating is important when you get car loans and mortgages too. It is also worth considering that the credit reports of anyone you live with may be linked to your report, and could reflect badly on you your wife or husband’s credit rating is tied to yours quite closely.

Good cards can have a grace period of up to two months bad ones might not have one at all. Check that the card you’re looking at has a grace period on purchases.

The most dangerous thing about debt consolidation loans is that the ones with lower payments generally last a very long time you could be paying it off for twenty years, or even longer. If you’ve got a really unmanageable amount of credit card debt, you might be considering a consolidation loan. If you do take a debt consolidation loan, you need to read the small print as if your life depended on it (it does), and then be very, very careful.

In some countries, you might not have a legal leg to stand on your card issuer can do what they like to you. When it comes to Credit Card Issuers, getting it in writing also means that you can hold them to what they say later on.

Most creditors would rather let you pay back a tiny fraction of what you owe than have to try to get money out of a bankrupt. They’ll be able to lend you the money at a much better rate than a credit card would, simply because they know why you’re taking the loan and can set regular monthly payments for you to repay it.

You need to sit down, work out a budget, cut unnecessary expenses and try to free up as much money as you can to pay back debts. When you’re paying back debts, a little strategy can make a difference of hundreds or even thousands of pounds.

If the advice you get is to sign up for another loan from one company in particular, don’t believe it the chances are that the person you’re talking to is just a salesman in disguise. If you are identified as sub-prime, you’ll start getting offers for loans secured on your property they know that if you can’t pay, they’ll get their money anyway.

Credit unions are like banks, only more local.

You probably don’t think about it, but using a credit card basically makes your money worth less than it would be usually. That’s why it feels so hard to pay a credit card back if you borrow a dollar from a credit card at 15% interest, sit on it for five years, and then give it back, guess what?

Essentially, every company has a slightly different way of working out how much interest you should pay each month. You might also note that consumers with more debt have less to spend and when money isn’t flowing, it hurts the economy.

You might think that one card issuer won’t know what you’re doing with a competitor’s card, but you’d be wrong. Don’t worry if you don’t understand all the maths involved here with credit card interest rates; it’s been deliberately designed by mathematicians and marketers to be as confusing as possible, to stop you working out what a bad deal you’re getting. After all, if you haven’t read this, would you really ever turn down a month off paying your bills?

If you’re in a situation where you’re relying on advances, you should start using your card for smaller things where you wouldn’t usually bother, just to avoid taking the advances and paying more interest. Transferring your entire balance to another card will make them sit up, take notice, and start making you much better offers than you ever got before.

In all things in life, remember that no-one gives you anything for nothing least of all credit card companies.

Lewis

Posted in Debt Freedom | Comments Off

9 Years Living Debt Free

Monday, November 9th, 2009

Sherry Ridge

I’ve just completed my ninth year of being completely debt free. On January 19, 1999 I paid off my first home. That 30-year mortgage ended up being only 6 ½ years, saving me over $80,000 in interest payments.

Six years ago, we moved. We doubled our real estate assets and increased our net worth. When we purchased our new home and property we paid cash. We’re still debt free and loving it.

Being debt free really is not about numbers, at least not numbers in dollars, but perhaps numbers as in time. I am very thankful to John Cummuta and the Debt-FREE & Prosperous Living™ and Transforming Debt Into Wealth™ systems for the opportunities that living this lifestyle have opened up for my family.

I’m a strong believer in helping your fellow man to help himself. For me it is important that I use my life to help others improve theirs. I get this opportunity almost every day. I go to work everyday happy and glad to be there. I love my job. I also love the work I am able to do for my community.

I write this not to boast, but to encourage you to reach for your dreams, to write them down, and then create your plan to achieve them. Being goal oriented will help you to attain all that you desire. Studies show that when we are goal oriented we are more productive, we are less stressed, we are happier and serene.

Working to achieve my goal of becoming and remaining debt free is what allows most of the happiness in my life. Before I started my path to financial freedom, I sat down and made a list of the things I had always wanted to do, but felt that time and money was preventing. I share some of my original list with you below.

1. Visit my family more often

2. Relax

3. Learn to golf

4. Learn to play the piano

5. Go back to College

6. Volunteer with local charities

7. Winter home

When I look at this list I’m proud to say that all but one has been accomplished. While the number 2 goal, relax is an ongoing battle. I think it’s time to reevaluate my goals and to set new dreams.

I could easily talk about my investments and my net worth, but living a Debt-FREE & Prosperous™ lifestyle is really not about numbers in dollars, but how many hours I can spend on field trips with my children’s class, how many track meets I can attend, how many students graduate from the ESL (English as a Second Language) classes I teach, how many families are helped by the Family resource center that I am on the board of, how many low income students we can buy school supplies for, how many days in a year I get to see my family, etc.

What are you dreams? What are your goals and why aren’t you achieving them? Most people fail to make a plan to reach their goals and that is what stops them from “just doing it.”

Make a list of things that you would like to do or always wanted to do, but feel that money and/or time have stopped you. From there create your plan, by committing yourself to becoming debt free. Once you have the plan, the steps are much easier to take. I hope this time next year you have items on your list marked off too.

Cathy

Posted in Debt Freedom | Comments Off

Free Debt Relief Online

Monday, November 9th, 2009

DEBT ONE FINANCIAL

Free Debt relief Online is an innovative solution for consumers struggling with heavy debts and need relief from the stress caused by this. Free Debt Relief Online uses a debt negotiation program with your creditors to lower your debts. Our goal is to save your most possible money and to get you debt free in the shortest amount of time.

We may be able to help you save more money than simple Credit Counseling service providers while protecting you from the harsh impacts of bankruptcy. We think we have the best solution for most consumers with serious debt concerns.

We are specialized in helping people all over the country. We regularly with intense work with creditors to resolve your outstanding debts, and thus we have created a favorable impression in debt relief services. Our unique Free Debt relief Online program takes all of your current debts and converts them into one easy-to-manage, affordable monthly payment.

Choose our services now if you are struggling with heavy debt amount and lot of stress. We can serve you in a better and different way and make you free from all of your debts and stress.

The Total Amount of your Unsecured Debt must be At Least $10,000, and the balance for Each Individual Creditor must be At Least $1,000. Unsecured debt includes: Credit Card Debt Oil/Gas Credit Cards Medical/Hospital Bills Personal Loans (unsecured) Department Store Credit Cards Local Merchants The following are NOT eligible: Past Due Rent Past Due Utility Bills Student Loans Secured Loans Mortgage Payments Income Tax Car Payments

Payments

Wayne

Posted in Debt Freedom | Comments Off

Lifting the Veil on Debt Consolidation UK

Monday, November 9th, 2009

Ed Pearson, Debt Dr

You’re sitting there one day, off from work due to the stress of your unsecured debts weighing heavily upon your shoulders. Suddenly, in the background noise from the TV you hear a fantastic deal - consolidate your existing debts into ‘one easy affordable loan’. You think wow, just what I need to get my debts under control and you get the sales blurb.

Sounds great doesn’t it?

Debt consolidation in the UK is not a new phenomena these days. It’s been around a while. Lots of people have taken out debt busting consolidation loans. So why is the amount of debt in the UK still rising so fast? And why are bankruptcies, IVA’s and debt counselling services stretched to their limits and running at all time high figures right now? Well people get sold on the advantages but I’d recommend thinking about the disadvantages too!

Advantages of debt consolidation UK

Well the interest rate normally comes down on the unsecured debt amount borrowed making the monthly payments easier to afford.

Your debts come under control quickly so the annoying telephone calls and letters from irate creditors stops.

Disadvantages of debt consolidation UK (this is the bit they don’t want you to think too hard about)

To get a debt consolidation loan usually requires some form of property. By consolidating the unsecured debts to your home some of the equity has now been lost. So what was once an unsecured debt now forms part of a charge over your property. Every legal advert in the UK selling this type of service will point out in the small print that your home is at risk if you fail to keep up payments on (this now larger) secured loan. So you’ve put more risk onto your property. I regularly meet people who have bought their house maybe 20 years ago for figures like £80,000 on a house worth £110,000 to find that a decade on they have a house worth (say) £180,000 with a new debt consolidated mortgage of £150,000. So they still only have a similar amount of equity in the property but also have a mortgage now nearly double in size!

Another disadvantage is that the term of the borrowing is usually increased. Well sometimes the debt consolidation companies in the UK will sell that as a benefit with a line like ‘you can take longer to pay your debt and allow yourself time to get on top of your borrowing over the coming years’. I find that an odd statement. You have doubled your mortgage in a decade and you have found yourself in debt but suddenly your spending habits will change and you’ll be debt free at some point in the future. What are your thoughts as you read that? Another interesting point arises here. Because the term is often longer, you will possibly end up paying much more of your hard earned money for that unsecured borrowing by the time you pay off your new secured lending.

Did the debt consolidation company ask what your lifetime ambitions are? You see, you may have got out of the immediate debt issues but you may just also have signed away the possibility of that early retirement / new car / that holiday to see your family down under too. You see, if the amount you are paying back is higher than you had budgeted for then you may need to work longer to achieve your dreams. Was this discussed with you?

Did you consider at least 6 solutions for getting our of debt trouble before you decided on your debt consolidation loan? Can the company you speak to even name 6 solutions for getting out of debt trouble? If not then you have ignored several other options that may have been more suitable for the financial position you found yourself in. It’s rare indeed to find loan and mortgage brokers that are fully trained in solutions to tackle insolvency and debt issues. They have their offering and will talk about the monthly repayment figures to demonstrate how you could be better off, but is it the best way forward? Well naturally, that depends on your situation.

A final word on debt consolidation in the UK

Now, I do believe that debt consolidation has its place but I also think that there could be more done to understand that there are other options for getting out of debt. Getting the right debt help and advice is essential. Look at the advantages and the disadvantages for each solution you consider for debt resolution and then make a more informed decision.

There are more options for getting out of debt trouble then most people realise, that includes debt consolidation but is not limited to just that course of action.

If you would like to know what the 6 solutions to debt in the UK are then you can get debt help and advice from Ed Pearson at Debt Dr.

This article does not constitute regulated advice. Please remember that any action regarding financial advice should always be taken only after considering the specifics of your own situation.

To find out more about Ed try, http://www.advice4debt.co.uk/debtquiz.htm

Ed Pearson is a Debt Dr offering debt help and advice to individuals and small businesses across the UK.

Whilst you may love the stuff he writes, you should only ever take action once you have considered your own set of financial circumstances with a professional. This article does not constitute financial advice.

Robert

Posted in Debt Freedom | Comments Off

Why Student Loan Consolidation?

Monday, November 9th, 2009

Robert P

A student loan is a kind of loan that students can avail of to assistance them in using for their professional education. Student loans are guaranteed by the government and typically have moderated loan rates than other kinds of loans.

Sometimes, one funding is not an adequate amount of to financing all of your educational expenses, including tuition, books and class supplies. This can force you to borrow many student mortgages based on information from different lenders, which can be quite confusing and even a good deal more expensive. To avert this, you serves to contemplate student loan consolidation.

WHAT IS STUDENT LOAN CONSOLIDATION

Student Loan Consolidation is the process of combining all of your student loans to a single new loan in on one repayment program given by one lender. The balances from all your previous student loans are paid off by the new loan. This allows you to pay only one loan instead of multiple loans. The interest monkey for the consolidated student loans is computed by averaging the interest rates of your recent loans.

You can also consolidate your student financing options amongst the loans of a new person, such as your spouse. However, this is not advisable. This is because if you ask for deferment, both of you have to balance the necessary criteria. Also, you will continuing to have to repay the loan nonetheless if you separate or divorce.

Most government loans, such as FFELP and FISL loans, can be consolidated. Some private loans can too be consolidated. Various banks and student loan lenders typically offer financing consolidation options. You can also go directly to the Department of Education to consolidate. Both classmen and their parents can avail of loan consolidation.

ADVANTAGES OF CONSOLIDATION

Aside from simplifying your payment responsibilities, another boon of student loan consolidation is that you are able to decide on the structure of your loan. Typically, consolidated student loans require lessened monthly payments as opposed to the original loans. If you’re having trouble making your monthly payments, consequently this option may just be for you. You can also translate your variable interest rate to a lower fixed rate, which can save you a lot of money.

You can also extend your repayment term from the standard 10 years for government financing options to reach up to 30 years. There is no maximum lonely time which you can consolidate, and loan you pay may be tax deductible. Consolidated student loans too have flexible repayment options, not excluding no prepayment penalties, allowing you to pay more as opposed to your monthly payments.

DISADVANTAGES OF CONSOLIDATION

Of course, there are also disadvantages to consolidating your student loans. By decreasing your monthly payments, you will have to extend the repayment period, which, in the end, can result in more interest. However, since there are no prepayment penalties, you can pay more than the required payments so the current you can repay the bankrolling faster. Another disadvantage to consolidation is that once the student loans experience been consolidated, you may not separate them again. You may end up losing benefits, the as loan deferment. You can also only consolidate once. Thus, it is essential which you research carefully for the best consolidation options before going through with the process.

AM I ELIGIBLE FOR CONSOLIDATION?

There are certain standards you have to meet before you can consolidate your student loans. For federal student banking consolidation, you can only consolidate if your current loans amount to more than $10,000. You have got to be throughout your 6-month loan grace period ensuing graduation or you should have already started repaying your loans. In order to be eligible, you also should have no past catalog of loan consolidation. If you’ve gone returning to school after your initial consolidation, at that time you are still qualified for a new one.

WHEN SHOULD I CONSOLIDATE?

Once you have started repayment or you are in the grace period, you can already consolidate your student loans. It is advisable to consolidate in the grace period, since this mostly possible outcome in a smaller interest rate.

HOW TO CONSOLIDATE

If you’ve reached the conclusion to consolidate all or one or two of your existing student loans, the mainly thing you have to do is watch for a bank or lender with the best offer. Student financial consolidation plans own different interest rates, fees for late payments and repayment terms. There are websites, such as FinAid, too can provide you with a list of bankers and their offers. Some websites can also help you arrange the consolidation. You can in addition consult a qualified mortgage counselor to help you determine whether consolidating your mortgages will truly be beneficial for you or not. They can help you in calculating the costs of your pre&wshyp;existing loans and compare it with the cost of the single consolidated loan. They can in addition explain to you your other options, such as revenue contingent payments, extended repayment and graduated repayment. By doing this, you can make an conscience decision regarding student loan consolidation, and save a good deal of dollars in the for a while run.

Jennifer

Posted in Debt Freedom | Comments Off

Is Consolidating Credit Card Debt A Good Option?

Sunday, November 8th, 2009

Uchenna Ani-Okoye

Well, the answer will more often be yes than no. Consolidating credit card debt is often regarded as the first step towards credit card debt elimination. However, even before you move to take first step towards consolidating credit card debt, you must understand that consolidating credit card debt (or balance transfer) is an action that you are taking to eliminate credit card debt. Consolidating credit card debt is not a means of deferring the problem for later.

Consolidating credit card debt is indeed a good option in more than one sense. Not only do you get relief from the rapid increase in your credit card debt, but also get other benefits too. Offers for consolidating credit card debt are in abundance and are very attractive indeed. Almost all the offers for consolidating credit card debt have an initial low APR period during which the APR is generally 0% (or some low figure).

In fact, this is one of the main things which make consolidating credit card debt a very attractive option. Besides this low APR, the offers for consolidating credit card debt also include things like no interest rate on the purchases made during first 5 months (or some other initial period) of balance transfer. This is another thing that lowers the speed at which your credit card debt gallops. So these are the two most important benefits that credit card suppliers deploy to attract people into consolidating credit card debt with them.

Then there are other benefits which include things like additional reward points on the member’s reward program of the credit card you are consolidating credit card debt to. These reward points can be redeemed for other attractive goods/rebates/rewards etc. Sometimes, the new credit card (i.e. the one you are consolidating credit card debt to) might be a credit card that caters more to your current spending needs both in terms of the credit limits and the way you spend your money.

For example, the new credit card might be a co-branded one offered by an airline that you have started travelling with very frequently in the recent times and consolidating credit card debt on such a card may open up much more benefits as compared to your current credit card which was based on your needs at the time of you applying for your current credit card. The credit card you are consolidating credit card debt to might open up discount offers to you.

Eugene

Posted in Debt Freedom | Comments Off

Options for Those Seeking a Student Loan Consolidation

Saturday, November 7th, 2009

Jerry Work

There are quite a few benefits to consolidating your federal student loans, making it something you should give serious consideration if you have such outstanding loans. These benefits include:

You have a single monthly payment. After consolidation, borrowers only have one lender, the Department of Education, making it much easier to manage the debt.

It may reduce your loan payment. The minimum payment amount of the consolidated loan may be less than the combined payments of your previous loans.

There is no minimum or maximum loan amount, and no fee for consolidation.

You may get new or renewed deferment options for your loans.

There are several different repayment options, with the ability to switch repayment plans at any time.

Loans may be consolidated in two ways - directly with the federal government using the U.S. Department of Education Direct Federal Loan Consolidation program, or through commercial lenders using the Federal Loan Consolidation program.

For students who have borrowed heavily, the Direct Federal Loan Consolidation program may be a good option. It includes a special income-contingent option that brings all obligations together into a single new consolidated loan with a monthly payment structure based on the borrower’s income level. The lower your income level, the lower your payment. As your income rises, your loan payment amount will rise accordingly. The repayment period lasts until the loan is repaid, up to 25 years. After 25 years, the remaining amount of the loan is repaid by the federal government, with the borrower the subject of a tax liability for the amount repaid.

One negative of the Direct Federal Loan Consolidation program is that it results in the payment of much more interest because of the long repayment period. Therefore, this option is only recommended for students who are absolutely unable to make a normal payment.

The following types of loans qualify for inclusion in a Federal Consolidation Loan:

Subsidized, unsubsidized, and guaranteed Stafford loans;

Perkins or NDSL loans;

Supplemental loans for students;

PLUS loans;

Federal insured student loans; and

Health professional student loans.

To qualify for a Direct Consolidation Loan, you must have a Direct Loan or Federal Family Education Loan (”FFEL”) that is in one of the following states: in grace, repayment, deferment, or default. If you are still in school, you cannot consolidate your loans.

Perkins loans by themselves cannot be included in a Direct Consolidation Loan - there must be non-Perkins loans as well. Perkins loans that are consolidated will be unsubsidized. It may not be advantageous to add Perkins loans to a Direct Consolidation Loan, however, because you will lose the special benefits that are attached to Perkins loans.

If your loans are in default state, they can still be consolidated if satisfactory arrangements are made with the lending institutions or you agree to repayment under the Income Contingent Repayment Plan. One thing to keep in mind is that, although loans in default can be consolidated, they will remain in a default status on your credit report. A better option is to rehabilitate the loan before consolidation. The status of the loan on your credit report will then be updated to reflect that it is current.

We’ve just scratched the surface of what there is to know about student loan consolidation. However, you should now see that there are many options when it comes to consolidating your loans. Consolidation can definitely make your life easier and is something you should consider if you are currently making payments on multiple student loans, including private student loans.

Ruth

Posted in Debt Freedom | Comments Off

The Best Kept Secrets to Reducing your Debt and Becoming Debt-free

Saturday, November 7th, 2009

Melissa Kellett

Growing debt can be very harmful and it can spread to unimaginable amounts. So if you have accumulated debt to a size you’re beginning to loose control over it, it is time to think about eliminating debt. This is a process that cannot be completed in a short amount of time; sometimes it will take years to become debt free. However if you take the time to follow this basic tips it will turn up to be a process that will not affect your daily life.

Taking Control Over Spending

Eliminating debt requires a bit of sacrifice, you need to understand that you have to take control over your spending. The first step would be to reduce inefficient expenditure, avoid buying things you will not need. In fact, do not buy anything other than what is strictly necessary. Tag your needs with labels such as “urgent”, “highly necessary”, “slightly necessary”, “unnecessary”, etc. Once you have established and committed to a strict budget you will be able to save money for leisure but till then avoid careless expenditure.

Budgeting

Design a budget where you will state your income and your spending, do not conceal anything. Do not forget to add any non regular expenses as your overall spending is not only made of everyday expenses. If you prepare it consciously you will see that you have expenses on a daily basis, weekly, monthly, bimonthly, yearly, twice a year, etc. You must be very careful in the process of making a budget since it will determine how much money you will be able to destine to eliminating debt.

Debt Settlement Agencies

You can contact a debt settlement agency. This agencies are specialized in providing assistance to those in debt and are known to reduce peoples debt up to 70% in some cases, do not expect such a high reduction however since it is only achieved in special circumstances. But you can expect a consistent reduction on the amount of interests that you pay and sometimes a modification in the length of the outstanding loans. Getting a cut on the principal of loans and credit card debts can sometimes be achieved but is more unlikely. Ironically there are more chances to get a higher reduction when your accumulated debt is out of control and your ability to repay is poorer.

Consolidation Loans

You can also apply for a consolidation loan; these loans are specially designed to be used to pay off any outstanding debt. The overall interest rate will be considerably reduced and so will be the monthly payments. More importantly you will end up with a single fixed monthly installment that will let you foresee your financial future with some certainty. Bear in mind though, that when this happens, you may be tempted to incur in additional expenses you have been postponing due to the lack of money. Refrain from doing so for you may reenter the vicious circle of debt you have just abandoned, your debt will rise again to higher amounts, you will not be able to consolidate again and all your efforts will be useless.

John

Posted in Debt Freedom | Comments Off