Debt Consolidation Loans to Pay off Bills

The average cost of a car, house, or college education has skyrocketed when compared to the average household income, so typical consumers need to borrow money if they want to buy a home, drive a car, or educate themselves or their children. Throw in a handful of charge accounts and credit cards, and it is no wonder that the average consumer is carrying more debt than ever before. With greater credit needs comes a greater need for debt management.

Good debt management ensures that you will have credit

when you need it, make wise borrowing decisions, and avoid disaster if you become overextended. You can ensure that loans are available when you need them by establishing and maintaining a positive credit record. You can benefit from many specialized loan programs if you are aware of your borrowing options. You can save money by taking steps to reduce the cost of debt and save yourself from disaster if you know what to do when you can no longer meet your financial obligations.



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What is debt management? As a modern consumer, you need credit. When you were growing up, you may have heard your parents or grandparents say, "If you can't pay for it with cash, then you can't afford to buy it." That may have been sound advice 40 or even 20 years ago, but such attitudes about credit are outdated and unrealistic for most adults working and living in modern times.
	The average cost of a car, house, or college education has skyrocketed when compared to the average household income, so typical consumers need to borrow money if they want to buy a home, drive a car, or educate themselves or their children. Throw in a handful of charge accounts and credit cards, and it is no wonder that the average consumer is carrying more debt than ever before. With greater credit needs comes a greater need for debt management. Good debt management ensures that you will have credit when you need it, make wise borrowing decisions, and avoid disaster if you become overextended. You can ensure that loans are available when you need them by establishing and maintaining a positive credit record. You can benefit from many specialized loan programs if you are aware of your borrowing options. You can save money by taking steps to reduce the cost of debt and save yourself from disaster if you know what to do when you can no longer meet your financial obligations.
Reducing the cost of debt It is good to periodically evaluate your debt situation and determine whether you can reduce the cost of debt. It makes no sense to be paying more money for interest if you can be paying less. There are several ways to reduce the cost of debt: You can refinance loans to get lower interest rates, use the equity in your home to pay off high interest loans and credit card balances, or transfer your credit card balances to cards with lower rates. Other options include prepaying debts and liquidating assets to pay off loans and to avoid further interest charges. You may also seek to reduce or eliminate noninterest costs related to borrowing, such as private mortgage insurance (PMI). If you have kept your mortgage payments current and built up sufficient equity in your house, you may be able to cancel your PMI coverage. Many of these options have tradeoffs. Options when you can't meet your financial obligations Ideally, you should never incur more debt than you can afford. If that plan fails, then your next task is to recognize when you are financially overextended and do something about it. Doing nothing is the worst possible choice. The longer you wait to take action, the more severe your financial troubles are likely to become. Increasing your income stream may be an option. If not, there are things you can do to reduce your monthly obligations. Reducing the cost of debt, or negotiating directly with your creditors (see Other Options When You Can't Meet Your Financial Obligations) may enable you to lower monthly payments. If you need professional advice, you can hire a credit counselor or contact one of the many nonprofit credit counseling services, such as Consumer Credit Counseling Services, which can often arrange an affordable repayment plan for you. If things are really out of control, you may want to consult an attorney about bankruptcy and determine whether you would benefit from a self-help support program such as Debtors Anonymous. You should face up to your financial difficulties and take steps to resolve them. Consolidation Options If you find that you are unable to meet your financial obligations, you have options. Some are simple, some are extreme, some involve lawyers or other professionals, and some involve little more than facing up to the reality of your financial situation. Which option you choose will depend on how severe your financial problems have become and what resources, if any, you have left. One thing is certain: The worst thing you can do is nothing. As long as your current income is insufficient to meet your current obligations, your financial problems will get worse. If your income has been temporarily reduced due to illness or unemployment, then you may be able to survive the period of financial crisis by liquidating assets, tightening your belt, or taking advantage of unemployment insurance and/or public assistance. Similarly, if your problem is related to one large and unexpected expense, such as a car repair or hospital bill, then you may be able to get beyond your financial difficulties once things return to normal. However, if your debts are mounting and you do not foresee a meaningful increase in your stream of income or reduction in your monthly expenses, then you should take immediate action. Dealing with financial burdens following natural disasters The hurricanes have long gone, but their after-effects are still being felt in many areas. Some employees have found and paid for emergencyhousing and collected lost documents to file FEMA and insurance claims - only to find they are now having difficulty paying their bills. Having trouble making ends meet? Did you know you can contact your local housing authority to ask about rent-rebate or Section 8 programs? Some mortgage companies are entering into forbearance agreements that allow you to postpone payments - or make partial payments - for the time being. You may even be eligible for tax deductions and credit - go to www.irs.gov for information. It's easy to feel overwhelmed when debt starts to pile up. Before you miss a payment, call and ask the business for smaller payments. If you need debt counseling, contact the National Foundation for Credit Counseling at 800-388-2227 or visit them on the Web at: www.nfcc.org. For more information about financial issues in disaster recovery consult "Disaster Recovery: A Guide to Financial Issues" at http://www.redcross.org/services/disaster/beprepared/FinRecovery/.

Dealing with financial burdens following natural disasters