Reduce debt with a carefully prepared debt consolidation loan

To simplify your debt, debt consolidation loans work. However, for real debt relief, debt consolidation is only the first step. Without changing your spending habits, a consolidation loan is trying to borrow your way away from debt, which makes no sense. If bundling all your debt into one payment lowers your interest rate it makes sense. But you can end up paying a lot more within the long run if the interest rate is only lower since the term is longer.

{|Article Source: For real debt reduction, plan your debt consolidation carefully by Personal Money Store

Plan ahead for worthwhile debt consolidation

To conserve on interest and get out of debt faster, debt consolidation takes careful preparing. Numerous debt consolidation calculators are available for free online. You are able to figure out all the factors that will determine if debt consolidation will work using these tools. Use an online debt consolidation calculator to experiment with different interest, payment and term scenarios to develop a plan of action.

Good debt consolidation moves

There are many different ways to go about debt consolidation. At MSN MoneyCentral, M.P. Dunleavy offers some of the stronger debt consolidation methods. If you have equity in your home, explore a home equity loan. The interest paid is tax deductible on a home equity loan, and it carries a fairly low interest rate within the high single digits. A secured loan you probably don't think about is your car, which you are able to refinance for cash to pay down debt. The rate of interest on a personal loans is a lot less than the rate on credit cards, making that a great way also.

Debt relief can grow like a rolling snowball

Many financial advisers think that you have to plan on keeping debt payments separate for debt reduction. Financial adviser Dave Ramsey likes what he calls the “snowball approach. The snowball approach pays off debts one by one, from small to large. List your debts in order from small to large. Your first priority is paying down the smallest debt. The snowball can give you some success fairly easily knocking off the easier debts and motivate you to continue with the larger debts. But it takes a lot of financial discipline, budgeting and saving for the snowball approach to work.

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