For those who have good credit, finding a way to reduce
monthly obligations is a pretty simple task. It can range
from obtaining a personal loan to consolidate some loans to
refinancing your home mortgage or car loan at a lower
interest rate to using the debt stacker method. For some,
it may be as simple as finding a new credit card with a
lower rate of interest and using it to pay off the higher
interest cards. Whatever the financial situation is, for
those with good credit, there are several different options
that are open for consideration.
For those who have less than perfect credit, the options
are limited, and it can be more challenging to find a way
to reduce your monthly payments. Certainly there is the
possibility of cutting household expenses in order to have
more funds available to make the monthly payments on
household expenses as well as loan payments, but it's
somewhat more difficult to find a way to reduce loan
payments when you have credit problems. Though difficult,
that doesn't mean that it is impossible. There are lenders
who are available to work with people who have less than
perfect credit, but you have to be willing to be a higher
interest rate in order to find a lender willing to work
with you.
If you own your own home, it is easier for the
credit-challenged person to obtain a loan to help him meet
monthly payments, but it can also be dangerous as well.
After all, you are putting your home as collateral to
secure the loan, so you have to be certain that you can
make the monthly payments so that you don't lose your home.
In all probability you are going to have to pay a higher
rate of interest than you would if you had good credit even
though the loan is fully secured. If you have high interest
credit cards that are adding to your financial burden, and
thus affecting the status of your credit, this may be a
good option for you to consider. You want to reduce your
monthly payments in order to get your credit back in track,
so a consolidation is a good way to do that if you are a
homeowner.
You want to take the time to weigh putting your home's
equity on the line in order to consolidate your debt. It's
important to look at your overall financial situation and
determine if that is really the best solution to your
problem. Better yet hire a wealth coach to go help you with
all your financial decisions. A n expert wealth coach or
personal economic advisor will act like your financial
guardian, assisting with your debt elimination as well as
wealth accumulation plan. Keep in mind if you do this alone
without an advisor, once you sign the contract, there is no
turning back, so take both the advantages and disadvantages
into consideration.
* The loan is secured by your home, thus if you fail to
make the payments, you can lose your home even if you are
paying on your primary mortgage
* If all of your equity is tied up in a consolidation loan,
it will not be available if you need it for something else.
* Is a consolidation loan the best option for you, or
should you consider debt management? I would say no to debt
management, however, in a few cases it may be the only
option.
* Will the payments on a consolidation loan be low enough
to help you get your credit back on track?
* Will the addition of a loan with tax-deductible interest
benefit you?
* The biggest concern you should have if you do this
without a wealth coach or economic advisor is not digging
yourself back into a financiall hole!
Although debt management may appear to be a viable option,
there are many scams that are out there that in the end,
you may be better off attempting to work out a reduced
interest and payment plan with your creditors. For
instance, some unscrupulous debt management firms have come
into existence over the past few years that will take your
money and never turn it over to your creditors, thus
leaving you with having to work out agreements with your
creditors or looking for a financial institution that will
approve you for a consolidation loan in spite of your
credit. Another horror story on debt management companies
is that they will make settlements with your creditors
without your permission, thus leaving your credit in worse
shape than it was. Add that to the ones who tell you the
fee is one price, and they charge you another by taking
your checking account information and creating an
electronic check or using Electronic Funds Transfer. They
will often do this without consulting you first, and in
some cases leave you with almost nothing in your checking
account. Instead of debt management, utilize credit
counseling services that will help you get your finances in
order without charging you a fee.
It is certainly easier for someone with good credit to find
ways to reduce their monthly obligations, but it is not
impossible if you own a home and have less than perfect
credit. The key is finding the best solution to the
problem. In some cases work with a debt management company
is a better solution than a consolidation loan. Weigh both
options before you make a decision.
copyright 2008 Billy Alvaro
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By Billy Alvaro
Americas Wealth Coach
Economic Advisor
'Discover the 7 easy steps from debt taxes and worry to a
stress free financial future in 37 1/2 days or less
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