Your Debt Threat

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Many economists have suggested strategies to reduce your debt quickly and efficiently. Out of those, snowballing method is gathering plenty of ice these days.  This method is very useful for getting control over your revolving debts – debts created due to spending on credit cards. The method is closely oriented towards your emotions.

When you are overburdened with debt, especially with a lot of credit cards, you get restless.  You really want to get rid of it, but you don’t know where to start.  The debt snowballing method comes to your help in this situation.

How to chuck your debts by this method –

Make a list of all your credit card debts – You should not include your mortgage payment obligations under this method because mortgage is not a revolving debt.  Then you should arrange all the debts in the ascending order – credit cards with smaller balances will be on the top of the list and the larger balances will be at the bottom. You will get a shock to realize the magnitude of your shopping!
If the balances of two credit cards are similar, you should give priority to the balance with higher rate of interest.
Write down the minimum payment obligations against each balance.  Take a total of all such minimum payments you have to make in a month.
Find out how much extra cash you can spare every month towards clearing your credit card dues.
You have to pay the minimum balance due on each and every credit card but you can use the extra cash towards payment of the credit card having the lowest outstanding balance.
As you go on making payments as per your plan, you will be able to complete the payment on the credit card with the lowest balance in a short time.
Now you can scratch this credit card from your list and concentrate on the next one in the order.  You will have more money to pay for this credit card as you will add on your money which you were using for the payment of the first credit card.  This will accelerate the process of payment and you will be able to complete even the payment of the second card perhaps quicker than your expectations.
Continue this process up to the time you pay the balance outstanding on all credit cards.  Now you can spare more and more amount towards re-payment of these cards as the money used for payment of your smaller cards is now available for this re-payment.
Finally you will clear of outstanding balances on all your credit cards. Time to celebrate!

This theory mainly works on psychology.  As you begin with your smaller debts, you end up clearing them faster.  This gives a pat at your back and you eagerly look forward to clear the next outstanding balance.

You should take only one precaution – avoid making any further addition to your credit card balances by shopping further!  Just take scissors and cut the credit cards which are fully paid!

The need for Secured Debt Consolidation Loans

Nowadays we are all accustomed to taking loans for matters as small as luxury shopping. Though loans are a necessity sometimes, they have become so common that they are our only alternative even when there are other options available. With the frequency of taking loans on the rise, the number of defaulters is obviously on the rise too. The need for Secured Debt Consolidation Loans is therefore more pronounced.

What is Secured Debt Consolidation?

Secured Debt Consolidation is simply consolidating all your existing debt—debt includes every unpaid amount. It could be in the form of outstanding bills like grocery store payments, credit card dues, gas and electricity charges, etc. and also incomplete loan instalments, mortgages, etc. Repaying or simply handling so many outstanding payments, each with different agencies, different instalment amounts, inclusive of distinct interest rates, while also keeping track of maturity days, due dates and other deadlines, can be rather harrowing. Secured Debt Consolidation makes sense today because it helps you manage your finances and makes repaying multiple lenders easier.

How does Secured Debt Consolidation work?

The first stage of Secured Debt Consolidation calls for a thorough investigation of your entire outstanding amount, i.e. debt. Your entire amount is then consolidated or merged into a single unpaid amount. This amount is then directly paid off in one go by taking a Secured Debt Consolidation Loan from your consolidation lender itself. All your debt is ‘gone’ instantly. You no longer bother about previous loans, lenders and their constant reminder calls. Your consolidation now deals with then and pays off your debt on your behalf. All that you have to do is make a single cheque to your consolidation lender for the Secured Debt Consolidation Loan.

Types of Debt Consolidation Loans

Debt Consolidation loans are of two basic types: Secured and unsecured. Since we’re talking about Secured Debt Consolidation Loans, let’s get some clarity on them. Secured Debt Consolidation Loans, being secured, require the borrower to pledge of place collateral of sufficient value against the loan as guarantee. This collateral works for you. It lowers interest rates, extends repayment terms, enlarges loan amounts, etc. All this makes your Secured Debt Consolidation Loan customized to your convenience.

Secured Debt Consolidation does offer you lower interest rates and a chance to better your credit score if it has not been so good in the past. It also offers you the opportunity to participate in a credit counselling program. This program helps you keep track of your expenses, stick to a budget and control unnecessary expenditure.

Is Secured Debt Consolidation a good deal?

Secured Debt Consolidation is perfect if

* You’re looking to repay your debt quickly.

* If you can no longer manage your financial state of affairs because it’s just too complicated.

* You can’t keep track of so many due dates and payments.

* You take it from the right lender

* You want to keep your expenses under control through credit counselling.

* You want another chance at bettering your credit score and you’re sure to repay in full this time.

Secured Debt Consolidation is not so great because

* It still means taking another loan, which means paying more interest in the long run.