Finance Tips

The average person juggles numerous bills each month–credit cards, auto loans, personal loans and more! If you’re getting buried beneath paperwork, you may want to consider a debt consolidation loan. Instead of dealing with multiple creditors, you’ll only have to pay one bill each month. And you can get a debt consolidation loan–even if your credit is not-so-perfect–if you secure it with some type of collateral. Here’s how to get approved:

1. Decide on your collateral

Whatever item you choose as collateral for your loan should be one you’re willing to risk, since the lender could take it if you can’t make your monthly payments. One of the least expensive options would be your home, since you could get a home equity loan, a home equity line of credit or a second mortgage. If you’re not willing to risk your house, you could also use an automobile or a boat. Some lenders will accept stocks or bonds, or even expensive belongings such as jewelry or electronics.

2. Find a lender

You’ll need to find a lender that accepts the type of collateral you’re using to secure your loan. Most major lenders and banks offer home equity loans, and many offer personal loans secured with a vehicle or boat. You may have to dig a little deeper to find a lender that will accept jewelry or other belongings as collateral. Check with your local banks and credit unions, and do a search online to find an appropriate lender.

3. Compare loan rates and terms

Before you sign up with any lender, make sure you compare their rates and terms with similar loans. Some unscrupulous predatory lenders may try to take advantage of your situation by charging you a high interest rate or extra fees. It’s always best to compare at least two loans to ensure that you’re getting the best possible rate.

Try using one of ABC Loan Guide’s Recommended Lenders For A Secured Debt Consolidation Loan.

Secured Debt Consolidation Loans are possible even for those with less-than-perfect credit. By using an expensive item you already own–house, car, boat, jewelry–as collateral, you become less risky as a borrower, making it more likely that you’ll get approved for a loan.

Figuring out the difference between a debt management service and a debt consolidation loan can be a little tricky. While both are designed to lower your payments and get you out of debt, each goes about this task in a different way. It is important to understand the differences between the two services so you can make an educated choice about which one would work best for you.

Debt Management Services

Debt management services offer many types of assistance and resources to help you lower your debt. Usually these services are non profit and they work with you to prepare a budget that will help you get out of debt and stay out of debt. They tend to be more fixated on educating the consumer on money management more than anything else. They often offer one to one counseling, finance classes, budgeting workshops, and bankruptcy counseling. Their goal is to get you back on financial track. Some debt management services also work with your creditors to lower your monthly payments, lower your interest rates, or even reduce or remove late fees and finance charges. Debt management companies don’t lend you the money to pay off your high interest credit cards, turning many payments into one.

Debt Consolidation Loan

A debt consolidation loan is a loan that is used to pay off higher interest loans like credit cards. It usually reduces your monthly payment and your interest rate, making it easier to pay off your debt faster. When you have more money to live on each month that can help to keep you out of further credit card debt. Often a consolidation loan requires that you own a house, so that the loan can be taken against equity in the home. There are risks involved with putting your house up for collateral on a debt consolidation loan. Should something unexpected happen to your income and you find that you can’t make your loan payment, you could lose your house. While this is an unlikely scenario, it is a possibility and should always be considered.

The sad reality about working for someone else is that you rely on that person for an income. It’s sad because most people are bought up in this mold – you go to school you get a job and you work until it’s time to retire. That’s great, but what happens when the plan gets derailed. Not all companies last for ever, in fact most don’t. If you rely on your income from a job and the company folds then you can be left in a very precarious financial situation. No income, bills piling up. What can you do?

Get A Job

I don’t mean apply for all the top paying jobs in the paper and wait for them to call you – I mean get a job. Today. What you need is something that is going to cover your expenses in the short term. It may be pumping gas, flipping burgers or whatever. When I shifted to my new city I had a shiny new double honors degree and wandered around town every day looking for someone to employ me. I walked past McDonalds every day without a glance because I was too good to work there. But as days turned into weeks I realized that I wasn’t saying I was too good to work there – I was saying I was too good to work. I took my burger flipping job, was head hunted based on my customer service and spend a little time as a waiter. That allowed my to job hunt for a ‘real job’ by day and earn the money to pay my bills by night.

Your finances are not about image or pride, they are not a game. you need money so you get it – whatever it takes.

Look for a debt relief loan

Debt relief, or debt consolidation loans are offered by a number of providers. Find one that fits your new situation and see if you can work out a special deal.

Eliminate all unnecessary expenses

Debt is a simple matter of having more expenses than income. You just lost your income so you need to lose as many expenses as you can. This doesn’t sit well with some people, but it’s reality – you have nothing coming in you need to minimize what is going out.

Sell stuff

See if anyone will buy your debt. Some debts are transferrable. For instance if you have a car payment that is hammering you, see if someone wants to buy the car and it’s outstanding debt. This gets you some cash and eliminates a big expense.

According to the latest report on consumer debt put out by the Federal Reserve, the US consumer debt is over $2.5 trillion. Each year the amount of credit card debt in America climbs higher and higher. Why is American credit card debt spiraling out of control? Well, there are several reasons for the yearly increase in the US consumer debt.

One reason Americans are going deeper into debt is because salaries have not increased enough to meet rising inflation. The 2007 Trends in Earnings Variability Over the Past 20 Years report by the U.S. Congressional Budget Office (CBO) stated that approximately “one-in-five saw their earnings fall 25 percent between 2002 and 2003, and about one-in-seven saw their earnings fall by” a decline of more than 40 percent. This significant decrease in earnings for Americans means while the price of gas, food, groceries, clothes, utilities and other basic necessities goes up, the average salary just isn’t keeping up.

Another reason the US consumer debt is rising is because credit card companies spend billions each year on gaining new customers and increasing rate limits for current customers. The average credit card debt for Americans is over $9,000 and even with the current credit crunch, the continuous stream of credit card offers continues to flow.

However, credit card offers don’t mean the recipients have to sign up. Credit card debt in America wouldn’t be growing at the rapid pace it is if consumers were more realistic with their budgets. The attitude of our society has become “I want it now, though I can’t afford it, so I’ll charge it.” If consumers exercised more discipline in their spending, the credit card debt in America would reverse its current course.

Regardless of the reason you may be in credit card debt, you need a solid debt reduction option. Credit card debt consolidation and debt consolidation loans are similar methods of debt relief that can benefit consumers with good credit. Debt settlement and bankruptcy are viable debt reduction options for consumers with bad credit.

US Public Debt in 2008

The US Public Debt (from the federal government) has been increasing for decades. The gross federal debt has increased greatly from $909 billion in 1980 to an estimated $9,575 B in 2008. (The federal debt was about $9,509 billion in July 2008.) In these 28 years the increase has been about $8,666 billion or about 10.53 times for an increase of around 953%. (Source: U.S. Office of Management and Budget, Budget of the United States Government, Historical Tables, annual.) In 2008, we find ourselves facing a federal deficit of from $560 billion to $900 B. (The official figure will be closer to $560 B for political and business reasons.) How much more will you owe if we only spend another $600 B than we collect in US federal taxes in 2008? If you divide $600 billion by 100 million workers then you get $6,000 per worker. If you divide a federal deficit of $600 billion by 160 million workers then you get $3,750 for each worker. The population of the US in mid-2008 was roughly 300 million citizens. Dividing $600 billion by 300 million equals $2,000 for each US citizen, including children under the age of 10 and people over 90.

Some of the increases in our US public debt (US national, federal debt) between 2003 and 2012 will be due to our wars in Iraq and Afghanistan, if the battles continue through 2012. What will be the costs? While hard numbers are hard to find and estimates are often off by 50% or more, the costs of these wars in 2007 was roughly $200 billion. This $200 billion for 10 years would equal $2,000 billion or $2 trillion. Since there were few years since 1965 that we paid off any national debt, we will probably not be able to pay off this $2,000 billion during the next 10 to 15 years. The interest on $2,000 billion at 6% for one year is $120 billion. Now you can begin to see the scope of the problem. The costs, including interest, from these wars could easily amount to at least $3 trillion from 2003 through 2022. The $3 trillion or $3,000 billion divided by 300 million equals $10,000 for each US citizen. Expensive wars for over 2 or 3 years tend to bring very large amounts of new debt to the US government and US citizens.

The US trade deficits are another huge source of increases in the US public debt. The following table is data from the US Census Bureau Web site (www.census.gov/foreign-trade/statistics/historical on July 15, 2008):

Annual Trade Balances

Year US Trade Percent

Balance of previous

in $ billions year

1994 -98.5

1995 -96.4 98

1996 -104.1 108

1997 -108.3 104

1998 -166.1 153

1999 -265.1 160

2000 -379.8 143

2001 -365.1 96

2002 -423.7 116

2003 -496.9 117

2004 -607.7 122

2005 -711.6 117

2006 -753.3 106

2007 -700.3 93

2008

Jan. -57.9

Feb. -60.6

Mar. -56.5

Apr. -60.5

May -59.8

Figures are seasonally adjusted.

Average per month for 2008 is -59

First 5 months annualized for 2008 $ -709 billion

You may notice that the foreign trade balance has increased from a deficit of -98.5 billion in 1994 to -379.8 B in 2000 to a projected trade deficit of around $-709 B in 2008. The total increase from 1994 to 2008 is likely to be around 620%! It is amazing that in about 14 years the US trade deficit will be greater than 7 times the amount in 1994. If inflation increased by 5% during 14 years then the factor would be only about 2 times.

According to the US Treasury (http://www.treasurydirect.gov/NP/NPGateway ) the US national debt on July 3, 2008 was about $9,492 billion or roughly $9.49 trillion. The national debt on July 3, 1998 was roughly $5.53 trillion. So in 10 years it has increased by about 72%. While the interest rate is unknown for the next 12 months, at 5% interest the dollar interest on the US national debt would be about $0.475 trillion or $475 billion. Dividing $475 billion by 100 million taxpayers equals $4,750 for each taxpayer. (I use the number 100 million because it is one-tenth of a billion so you can multiply an amount in billions by 10 and get the number of dollars per individual, and probably not more than 100 million individual taxpayers could afford to pay off things like interest on the national debt and trade deficits. So Dividing $475 billion by 100 million taxpayers equals $475 x 10 = $4,750 for each taxpayer.)

How does this affect you? In several ways; it would take a book to explain them. A few of the ways are the following:

If you are a tenant, non homeowner or even homeowner and you are suffering from lot of debts, then you can move for unsecured debt consolidation loans. Do you want to get rid of all previous loans through single manageable loan? If yes, then you are welcome to avail unsecured debt consolidation loans. These loans are available without placing assets as collateral, but you have to provide documents such as, annual income proof, financial standing and employment status.

Debt consolidation loans are available in both forms, unsecured as well as secured loans also. Debt consolidation unsecured loans are available with competitive interest rate. The reason is, there are lot of lenders, banks, and financial institutions who have competition for providing loans.

Unsecured debt consolidation loans come along with lot of advantages, for instance, larger repayment duration, low monthly installments and so on. Unsecured debt consolidation loans not only help you financially but also improve your credit history. If you make payments on time then you will be known as good credit borrower.

In unsecured debt consolidation loans, you are paying higher interest rate compared to secured debt consolidation loans; the reason is obviously absence of security. It means lenders have risk on unsecured debt consolidation loans. If you fail to make repayments on time then lender can take legal action against you.

Unsecured debt consolidation loans are available online at your convenience where interest rates and terms and conditions are already defined. Apply to a lender whose quotes are suitable to your circumstances for better deal. If you are busy and don’t want to go to the offices of the lenders and want early approval then you can apply through online method. Through this method you can apply from single click from home with the help of internet. After researching and comparing, you became able to decide which deal is better for you.