Can your existing debt be reduced with new loans?

 No one wants to face an overwhelming debt, yet thousands of people face this reality every year. They borrowed more than they could hope to pay. As the old saying goes: when you’re in a hole, it’s wise to stop digging. It is therefore sensible to avoid borrowing even a penny more when the situation becomes so difficult.

Is it really prudent advice?

 Is it really prudent advice?

In reality, an adage cannot solve a question as complex as that of debt. Surely, increasing one’s liability by adding to the debt with new loans is not wise; the secret is to replace with good loans your existing bad loans.

Debt and rehabilitation of your tax life

 Debt and rehabilitation of your tax life

There is a caricature of the over-indebted people who imply that they spent irresponsibly, that they did not know how to live within their means, and so they deserve a bit of their fate. It’s true, there are some people for whom it’s true, but most of the over-indebted people are due to circumstances out of their control: a job loss, a medical emergency requiring travel or even care a relative can all lead to a level of debt that exceeds the borrower’s ability to pay.

A responsible person looking to get rid of his debts usually stops borrowing the minute his financial situation or income improves. There is no harm in wanting to avoid increasing more debt. A restructuring or consolidation of what is due in these circumstances, however, can be a tool that allows a borrower to better manage the costs and payments associated with his debt.

Get out of the high-interest debt trap

 Get out of the high interest debt trap

Financial difficulties can often come together. Someone who is in a precarious situation can easily miss a credit card payment or two, which often causes a salty increase in the interest rate on it. A reasonable rate of 11% can very quickly be 27% before the situation is stabilized. Render it, it can be even harder to reduce, let’s make pay the amount that is due on this account.

High-rate credit cards can trap a borrower in a nightmare scenario where he finds himself paying senseless sums with almost no progress towards deleveraging. Example: A $ 5,000 credit card balance with a 27% interest rate on which you make minimum payments of $ 130 per month will take more than seven and a half years to fall to $ 0! The total amount you would pay is $ 11,713, including the initial amount. That is, you would pay $ 6,713 in interest on just $ 5,000! Your first payment of $ 130 would only reduce the principal of $ 18, the difference being entirely an interest payment.

You can, of course, avoid this trap by making larger payments and decreasing the balance more quickly, but in an already precarious financial situation, this may be impossible. If you have three credit card accounts of this type and you make three payments of $ 130 out of a total of $ 15,000 in debt, you will find the time very long and the progress very difficult. These minimum payments would represent a significant financial obligation and an interest cost alone that would exceed $ 20,000.

In such a situation, it is clear that a loan with a more reasonable rate would be wise and responsible.

A new personal loan and a new reduced interest rate

If we continue with the example above and replace the same credit card from $ 5,000 to 27% with a personal loan of the same amount at 13%, the same payment of $ 130 would allow you to settle the account 40 months plus early and pay only $ 1,504 in interest – a total of $ 6,504 and a saving of $ 5,209!

When we look at the situation from this perspective, we realize that it makes a lot of sense to look for new loans when we face overwhelming debt. It is not a question of borrowing to borrow but, funny, it is to borrow in order to save thousands of dollars and to deleverage more quickly! These are savings that you could reinvest in your future and in your financial life.

Consolidate your debts allows you to better manage them

 Consolidate your debts allows you to better manage them

When you owe large sums on multiple credit cards it can be difficult to manage your budget and payments as you need. The three payments of $ 130 in our example represent a total of $ 390, and this only to meet the obligation of the minimum payments! A single consolidation loan via Pixel Inc find more information with a reduced interest rate would allow you to have one payment to be made per month with interest costs much lower than your current situation. In this scenario, it is easy to consider a new minimum payment of $ 280 – that is, $ 110 more available in your budget each month to pay for groceries, insurance, or any other bill. Or, if you want, you can also apply this amount to your new loan and get rid of it even faster!

A new loan can be a new start in your financial life

 A new loan can be a new start in your financial life

Far from us the suggestion that you borrow and borrow to fill every financial glitch. A loan can be a tool to improve your situation. It’s up to you to discuss it with a professional and see if this tool would be useful for you.

How to consolidate your holiday debt

The holiday debt is often unexpected: you visit your loved ones, you eat well in beautiful restaurants, you celebrate with your friends and family and you buy the perfect gift to those who are more dear to you. Finally, the new year arrives and your credit account arrives in the mail and you do not really know how you did to spend so much money. It’s January and you have more debt that looks healthy, looking for an option … Do not worry! You can consolidate- read the full info here!

Organize for payments in a priority order

Do not panic. Yes, you have a lot of accounts to pay, but it is not insurmountable. That said, you need to take an inventory of your accounts and make sure that you are able to make your minimum payments on all your accounts every month. Otherwise, you have the chance to do significant damage to your credit rating – something to avoid!

The advantages and disadvantages of balances transfers

So first step, you should now think of transferring the balances of your credit cards at high-interest rates to your cards at low rates. If you do not have low-interest cards, you can buy one. Be careful and shop around for your credit card among the options offered by several banks, however – be sure to do your research because each successive credit survey will be rated and may have a negative impact on your credit report. If, by shopping, you find an option at a much lower rate than your existing rate, enjoy!

It is important to note here that many banks apply a fee when balances are transferred. Taking this fee into consideration is important because if it turns out to be too high, or if you think you can pay your balances in a relatively short time, it could ruin all the savings you thought you could make with your transfer.

In addition to the transfer fee and the limitation of credit inquiries, there is another factor that needs to be evaluated: is the interest rate that makes your new card so appetizing a promotional offer? If this is the case, once the promotional period has elapsed, what will your new rate be? It is possible, or even probable that it will be significantly higher than your existing rates!

Is a personal loan worth it?

An interesting alternative for consolidating your debts would be to apply for a ꈍ .̮ ꈍ payday loan debt solution More Help at PaydayLoanHelpers ꒰ •͈́ ̫ •͈̀ ꒱ˉ̞̭. This could allow you to rid the high-interest balances on your credit cards and pay a single affordable account with a reasonable interest rate every month. Once the loan is approved and your balances are zero, put your credit cards aside and focus on paying off your existing debt. Enjoy the savings that this consolidation allows you!

At all costs, avoid the common mistake of restarting the use of your credit cards once you have consolidated your balances: this is a magic recipe for you to find yourself in an overwhelming debt situation.

Use your home equity to clear your debt

The last option to evaluate for a holiday debt would be to transfer your balances to a home equity line of credit. This type of loan uses the difference between the value of your mortgage and the value of your home as collateral. You will find in most cases that this type of line of credit has a much more affordable rate than your credit cards. Be careful, however, because these credit margins often have interest rates that vary by market, so it is possible that your rate will increase over time.