Doesn’t is seem strange that a multi-billion dollar financial company which loans people and business money everyday from financing homes, credit cards, business and everything in between must now essentially go back to the people (their customers) they loan money too and ask for help.

Loan Lessons to Learn

We can learn from all of this money mess on a personal level, break down Citigroup’s problems and apply the principles to our own lives.

One for the things Citigroup did was make horrible lending choices. They went against “best lending practices” and loaned money to people who probably should have not received any loan. True, the borrower did have to ask for the loan and they are at fault also. However, the borrowers did not have the cash reserves, steady income or give enough of a down payment to handle a money storm. Or these same people got a credit card with limits and spending habits out of check with no financial discipline… just like the company that gave them the loan.

Don’t be like Citigroup and make bad lending (borrowing) decisions. Understand the limits, start learning to manage money the same way in good times or bad. Why should handling money be different?

What is your cash reserve now? Do you have an emergency fund? Have you borrowed way beyond your means to repay? Freeze the spending and begin to pay things down.

Citigroup made bad choices and it is costing them dearly. Will your choices cost you? You unfortunately do not have the luxury of heading to D.C. and picking up and check for your bad decisions.

Building up your credit is the best solution for stopping creditors and collections from contacting and bugging you every day. If you are in the process of repairing your credit, you probably already know you have a rocky road ahead. Creditors are the people you owe money to and if you do not have the money to pay, then they will go to great lengths to get the money somehow. No matter what the laws and guidelines are stipulated by the credit agencies, many break laws to get their money back.

They say money is the root of all evil, everyone wants some. The best way to avoid creditors and collection agencies is to stay ahead of the game and pay your bills. in a timely manner. If you have an electric bill, insurance policies, car and mortgage payments, credit card and other debt, you may want to outline a monthly budget. When you can combine your payments it will help you outline any troubled areas.

When you see any hidden dangers, make sure that you find a workable solution to get ahead of the game and avoid being hassled by creditors. Nobody likes it when they get nagged, but if you owe money, this is the position you will find yourself in. Do not get in over your head, if you know you are deeply in debt then it will be wise to avoid the malls until you can pay down your debt. If you owe more than you can pay, you run the risk of losing your home, car and any other assets.

If you know your deep in debt, you can always sell some valuable items to get out of debt. When you sell the items, take the money and apply it to your outstanding bills or open an account that will allow you to save money. A savings account that has a no fee at start up is a great beginning.

Sometimes you will even get money back or interest will accrue on the money you have in the bank, so you are actually making money. If money is what makes the world go round, making money and how you spend and pay it back is the solution to your debt and the key to rebuilding your credit.

The last thing that anyone wants is to be in escalating debt. You cannot avoid creditors from calling you all the time. Between the creditors, collection agencies, judges, lawyers and other menacing personnel, you will be mentally tortured. This is a point that many people do not realize, as they are running up their debt. If you have a good credit record right now, it is important to keep in good standing, get copies of your report, keep your files on hand and current to monitor your credit scores.

If you notice anything questionable on your report, then you need to contact the credit bureau and dispute it as quickly as possible. Your credit affects every area of your entire life. If you have a bad credit report, then you can be denied a job, apartment or turned down when you try to get a line of credit. The curse of bad credit will loom over you like a dark funnel cloud.

There is still hope even if you have bad credit. There are government programs and private agencies that are willing to team up with you and help you with your bad credit. The unthinkable can happen, you can get a home or car loan, or possibly a credit card. There are new prepaid options for those who have bad credit. They are the same in concept as an actual credit card, only you add money to the account, pay a small fee and use the card. The world is beginning to recognize the problems that happen daily for many people. The best thing to do is to stop the creditors from taking over your life by building up your credit by paying your bills on time.

Managing your personal finances requires steps that are almost the same as managing corporate finances. Basically, as you go through everyday living, you live, work, spend and save. These activities are very much the same as how business financially operates. Just as how companies regularly check on their finances, you must also review your own financial books.

Companies compare cost of production versus profit. In your case, you might as well compare your monthly income and your monthly expenditure. Instead of managing your finances using basic methods, let us go a step higher and deal with it using corporate money-managing concepts.

How fast do you burn cash?

There are companies who are left with no choice but to spend their venture capital for overhead expenses before they could generate profit or positive cash flow. They had to do it so they can start up with any new standby projects. This is usually measured in terms of cash spent per month. Clever companies track the speed at which they spend their funding per month. This way they may be able to know the probable life span of the company.

Putting this concept into your personal story basically tells you to monitor your monthly expenses. Your paycheck should have a portion allotted for your retirement fund. Spending your money too fast and maxing out every single source of income will lead you to a great disaster! Avoid debt. Spend your money wisely. Save up!

Say for example you are earning $50,000 annually. But you spend $55,000 per year. You are actually at a loss of $5,000 each year. Ask yourself, how long will you survive at a yearly loss of $5,000. Not quite long, isn’t it? So save more and spend less.

It is so tempting when you have a credit card. Everything is so easy because whenever something new is available, it will always be a swipe away. But before you dip into your savings and before you get that plastic card out of your wallet, think about how hard it was to earn the exact amount of the service or goods that you are now craving for. Is it worth your money? Or are you just buying it to be IN and because it is new?

Sometimes people do not worry when they spend using their credit card even if the bill arrives; after all, the minimum payment is much less compared to their income. But do not look at the branch, check out the root, and try to see things in a bigger much better angle. You actually have the huge total bill amount to pay. Why not spend money on preparing for your retirement instead of spending it monthly to pay for credit card debt? Burn rate – cut that thing out!

Your Personal Measure of Profitability

Your monthly expenses and savings are all under your control. Whenever you apply a lousy strategy you will always find yourself swamped in a pile of debt. So, try to review how much or what part of your income actually goes to your savings?

To monitor and to measure your profitability rate, simply keep track of your monthly earning and your monthly expenses. Expenses must include all big and small expenses that used up a portion of your income. See how much of your income goes to your savings and how much are spent.

Knowing that you have enough money at the end of the month after paying all your bills due for that particular month does not mean you are safe. Plan months or even years ahead. Evaluate your probable situation in case you max out all of your emergency funds and savings.

For instance, you earn a net income of $50,000 per year. Net income means your pre-tax income. After adding all of your expenses you found out that you only spend $47,500 each year. Net income minus the expenses earns you a profit of $2,500. Compared to your annual income, this gives you a profit margin of 5% ($2,500/50,000 = 0.5; 0.5 x 100 = 5%).

Benefits of Planning Ahead

After doing the Math, see how the figures satisfy you. Are you happy with what you have worked for? Determine if the amount will suffice after retiring from your current job. As the boss, does your book tell you that your very own company will last for long.

When you check, do not just qualify, quantify everything. It is not enough to say you have enough; rather, see if the numerical figure before you goes beyond what is satisfactory. Corporate concepts say that a company must go beyond 1-2% profit margin. The greater the profit margin, the more stable is the company. Does your personal profit margin qualify considering these requirements?

To be able to meet the said requirements start off with a goal. Determine the amount you will need to turn your dreams into reality when you retire. At the moment, you may not have any exact idea about this, but from today you must spend time thinking about it. Make sure you come up with an exact figure sooner or later.

Increase Your Profit Margin

Just in case you found out that your personal profit margin is not enough to fund your retirement savings, now is the time to do a recall and review of your expenses. If possible and whenever necessary, cut back on unimportant expenses. Just spend on what is needed. Little sacrifices won’t do you any harm. You will soon reap the fruits of your labor in a way that you really want it.

However, if you see that your profit margin can provide more than what you really need or want, increasing it will allow you to achieve your goals earlier. Why wait for a long time when you can free yourself from debts and financial burden earlier than what you planned?

Managing your finances is a challenging task. But remember that it does not pay off if you invest more emotions than intelligent decisions. In this personal business of yours, you as the investor may be emotional, but your company is not. Paying bills may sound sad but you must get though the emotional part of it. Once you get the knack of dealing with things, you will soon find out that it is far better to get overjoyed due to an A1 financial status than weeping over piles and piles of debts.

The other day I received an offer to consolidate credit card debt. The “package” was for $50,000 at 7.99% APR or so I thought! I do not need to consolidate any debt; especially on credit cards… any charges made get paid off each month. Normally, offers this go right into the trashcan, but this time for whatever reason I decided to read the complete offer.

Most people I talk and counsel, never take the time to read the fine print on debt or credit card offers. They head straight to the “sign me up” part to fix their money problem.

Let’s look at the details shall we!

• No Annual Fee
• No application fee
• No collateral required
• No payment for 3 months*
• One predictable monthly payment

The first 3 items come to no big deal. Why? First of all the company already did their work by basically “pre-qualifying” the applicant (me) limiting their credit risk or they would require some type of collateral. No annual fee or application fee shows how generous the company is! If the consolidation loan offer is accepted they will make plenty over time on interest.

No Payment for Three Months

Here’s where reading an offer becomes a requirement. Although NO payments for 90 days – interest on the amount would accrue over the 3 months. Why charge an annual fee or application fee when 90 days covers both.

One Predictable Monthly Payment

This may appeal to some consumers by giving them an opportunity to know up front the amount owed each month on their consolidated debt at what looks like a reasonable APR – 7.99%. However, the details of this financial contract give the company the reserved right to change the APR at their discretion. So much for a predictable payment amount!

Then the kicker:

“if you fail to pay the minimum monthly payment by its Payment Due Date on any two occasions within 12 consecutive months, we may increase your APR up to a Default APR of 27.99%.”

In the beginning what looks like a reasonable offer – just got ugly.

Let’s assume you borrowed the $50,000, 3 months later you lost your job and made payments but late. One day you open the mail finding the interest rate skyrockets to 27.99% APR.

Paying $750 month at 7.99% would take 89 months or 7 years, and 5 months to pay the consolidation loan off. When the rate goes to 27.99% the monthly payment would move to $1340 per month to pay the debt off in the same 89 months.

Over the 89 months $16,316 will be paid at 7.99%. At 27.99% the interest jumps to $68,724 over the life of the debt repayment.

Moral of the story!

Read the fine print, run the numbers and understand completely your financial position before making any financial moves. One stupid signature could place you in deeper debt!

You have more than likely heard of a scenario where a person with a solid job and income is refused a car loan or other type of loan. Just because the person has never had a credit card or had debt recorded with the major credit reporting agencies, they have no credit history.

Very few people can pay cash for a home priced in the current real estate market. Taking out a mortgage is a given for most homebuyers. The dilemma is how a person, with no credit, can establish good credit.

Credit Cardholders in the U.S.

Statistically, data provided from the Federal Reserve and U.S. Census tells us the norm for Americans is to have four credit cards they use regularly. There is also a 15% that carry 10 or more cards. This incredible data is enlightening on the importance of credit cards in our society and financial culture. There is a 24% out there that don’t have any credit cards at all. You have to wonder how they function.

Original Appeal

Not having to carry around cash, which could be stolen, yet allowing consumers to make purchases and protect a consumer of fraudulent purchases, were the most popular incentives credit card companies used in marketing. That is what your debit card from the bank does today. You don’t need a credit card for that. Even with banks giving all of their costumers these two benefits, credit cards have become a part of 76% of Americans’ financial lives.

Internet

The ability to make purchases from all over the world through the World Wide Web
has been an influence on the amount of credit card issued. There are few and far between websites that accept a C.O.D. as payment, but major credit and debit cards can be used all over the web. Having a credit card allows you to find the best deal on your purchases and quite honestly, it is a great feeling. Who doesn’t like to save money?

Single Card Consumer

We are living in an internet and credit card era. That doesn’t mean you have to carry 10 or 15 cards. Having only one card will help you keep up with your debt reality. The credit card market is a lucrative business and card companies advertise with great success the millions of cards available today.

Don’t be fooled into believing your credit cards is disposable income or gives you buying power. That’s what the card providers want you to believe and they have had incredible success. Credit cards lead to additional debt. Buying on credit is a loan of sorts with ridiculously high interest rates, or APR. This type of interest compounds, or adds accumulated interest back to your unpaid balance, so that interest is earned on interest. That doesn’t sound appealing; maybe that’s why they don’t put this in their adds. This reality is becoming more widely spread knowledge among consumers, as it should be. To strengthen their marketing strategy, now they over a variety of incentives, rewards, travel points, discounts, and cash back to entice new cardholders.

Somehow, somewhere along the road, your credit card activity became part of your credit rating report. This leads the consumer to believe not owning a credit card will disqualify them from purchasing a home, or getting a car loan, and those American “needs”? like a flat-screen HDTV in every room of the house including the bathroom. Not having a credit card might take away your right to the “American Dream.”? When you look at it this way it sounds laughable yet at one point or another, most people get sucked into the idea.

We are by nature a culture that strives to keep up with the Jones’. Some fall into a fabricated myth that having more, like with everything, is the best idea so they go out and get every card they are approved for. The Myth: If having one credit card establishes a credit history, 10 cards will help give me a great credit rating. False!

Three Different Views:

Banks

When you go to apply for a bank loan, loan officers with investigate your debt to income ratio. They want to be sure you are faithfully paying off your credit cards and maintaining a zero balance and/or if you are aggressively paying on the debt you have. If you have 20 cards with zero balances, why do you have so many? The bank could be looking a disaster waiting to happen. You could go out the next day and max out your cards. If you do this and they give you the loan, there is no way humanly possible you will be able to make all of your credit card payment and their loan payment, which is ultimately their main concern. They want to know they will be your top priority and that you will consistently make your payments to them..

This won’t hinder the bank from giving you a credit card though. The revenues made on issuing you one their credit cards are outstanding in comparison to the loan you were applying for.

Credit Card Companies

Credit card companies view on debt is “just keep spending.� By carrying a balance, their high interest rates are bringing a sickening amount of money. All they care about is that you pay your minimum payments regularly. How much debt you incur is of no interest to these companies; you are their best customers.

Store Credit

Store credit cards are looking for the same interest profits but their main goal is different. They offer a modest credit limit to secure an occasional consumer makes future purchases at their store. They will likely offer a special discount or coupons in the mail with cash rewards the consumer uses at the store which can make applying for the card alluring. Store credit cards are not worth it in the end. If you must, pay off your total balance every month. These cards have a steep APR on them, sometimes even 25%, which is nuts.

What do lenders want?

They want a person who pays in a timely manner not just one the interest but on the principal as well. That’s where your credit card is a good indicator for a prospective loan to be granted.

Lenders will look at past student, car, furniture, and/or house loans likely on your credit report. This will give the lender an idea of your payment history and how fast you paid that debt off.

The idea that a person’s stable income doesn’t factor into the mind of the lender is absurd. You may have perfect credit, but if you are unemployed or looking for a job, there is no way a bank will give you a loan. It could take months for you to find a job and who is going to make sure you are even looking. Steady income at a job you have worked at for a considerable time, a year or more, does matter.

Tips on How to Improve Your Credit Rating

There is something called a credit to debt ratio. By its definition this ratio is calculated by comparing the total of debt you have to the total credit you have available on revolving accounts. To explain this even further, let’s pretend, by adding up the credit available on all your credit cards you have $12,000 available. You also add up your current debt which totals $2,400. Next you do the math. Divide your available credit into your total debt. The amount then needs be multiplied by 100 to give you a percentage. In this scenario, your debt to credit ratio is 20%. The ideal ratio is 30% all the way up to 50% which is acceptable. Find a great card with a low APR and benefits that suit you and stick with that one card. Over time lenders will be able to view how you’ve made payments.

Maintaining a lower credit to debt ratio may involve balancing your debt on several credit cards. When this ratio is over 50% on one card transfer some of it to one or two lower interest cards that you have a good credit to debt ratio on. This might include getting a new card so you have more credit to add to mix. Make sure to pay off any troublesome accounts. Especially if your going to have your credit report pulled for a loan or large purchase, spreading out debt and adding more credit will improve your credit rating. This may take a month or two to show up on your credit report so don’t procrastinate.

Do your remember the discussion about having too many cards doesn’t improve your credit? Well, when you use the previous strategy taking out too many cards will backfire on you and rate poorly on your credit report. Keep this in mind when employing this strategy and weigh the benefits.

Consolidating

Your credit rating is important but is not the deciding factor for lenders. Guess what? Your credit cards make up only a portion of your credit rating. The last strategy of spreading out debt may improve your overall total debt which is what is really important. Excessive debt though should be consolidated, or combined, onto your lowest interest credit cards. You will be able to use the money you were making on the various minimum payments of your higher interest cards and apply it to one or two low interest cards. This could possibly even allow you to make greater payments than the minimum required and start paying on the principal.

Loan

Because you are looking at improving your credit rate, if you qualify, take out a simple interest, low rate loan to pay off all of your credit debt. You will be paying much less on interest and more on your principal getting yourself debt free sooner.

Wrap-up

By consolidating and eliminating debt, you will most definitely clean up your credit rating. You will also need a good income and to get your finances in order for a loan approval. No credit card can replace these last two factors.

Consumer Credit Counseling Services is the most popular “service” known to consumers facing money problems. Those consumers battling the managing their finances can get help with exploring their options on debt repayment and learn how to create a budget to make their money behave. For many, it is the last choice before filing for bankruptcy.

Does Your Financial Position Qualify?

Too many consumers fall for the quick ads announcing cutting your debt in half by using a service to become their “face” with your creditors. These credit counseling companies can negotiate with creditors for lower interest rates, stopping fees for late payments, reduce the monthly payments and negotiate debt repayment schedules.

However, not everyone qualifies! Remember this is a business even though the label on “Non Profit” is stamped on their advertisement. Often you will need to have over $10,000 in consumer debt to use their credit services.

If you pull the emotional curtain away and step back, the counseling services in the credit industry bring the biggest element to finances that their clients do not and that is organization and discipline. Creditors work with the counseling services because it is in their best interest to do so.

Do not think for a second that their services are free… there will be a cost.

• a monthly fee
• usually a damaged credit score
• Lifestyle changes

You can take all the same steps the credit counseling companies perform all on your own and probably get out of debt quicker with less cost by doing the following:

• Start living on a budget
• Contact your creditors to work out new terms by being upfront with them
• Getting organized
• Staying Focused
• Make Lifestyle changes

I’ve done it and you can too!

Join our email list to begin learning how to take control of your finances.

If you like so many other consumers are trying to eliminate credit card debt, you more than likely have been told to consolidate it. Consolidation is when you combine your debt in a manner that is more affordable and that can reduce the amount of time you are paying it off.

There are two ways to go that follow: transfer debts with higher annual percentage rates (APR) to lower APR cards; transfer your debts to a new zero percent or lower interest card; and combine all your debt with a low rate, simple interest loan. We will only look at the first two options.

Obtaining a lower APR is your goal and there are two ways to do this.

First contact your current credit card companies and ask if they can lower your interest rate. They will often offer you lower interest rate, minimum payment plan than the minimum payment you currently have. You also need to stop using the card while you pay it off. They will typically do you this if you have paid your minimum payments on a regular basis.

If you can’t negotiate with them, mention that you will be transferring the amount to another card and that you will be closing your account with them. This sometimes helps them open up to other options or the agent might transfer you to a billing agent with greater resources in the interest of keeping your business.

Investigate the current APR on your cards and shift your debt to lowest rate cards. It is important to spread you debt out on several, if the amount will bring you over your credit limits.

The last option, you have to be mindful with. Apply for a zero percent, introductory rate credit card. The catch is this is an introductory rate that will last anywhere from six months to a year. They also normally put a lower credit limit than your total debt and the post introductory APR will be astronomically higher than the cards you have debt on. Your best bet with this form of consolidation is to remember the cut-off date and start all over again with a new zero percent credit card.

For either of these methods to really work, don’t accumulate more debt, make payments on time, and add some money to your minimum required payments. By doing this, you’ll be out of debt sooner and happier because of it.

When you think about the fact that debt is rising all over the world and that in the last few year years, household debt in America has gone over 2 trillion dollars not including mortgage debt, it is easy to see why many consumers just like you find themselves thinking about their own debt.

If you are in a situation where you can think about lessening your debt, there is a good chance you will consider debt consolidation. Before you go ahead and take the plunge, however, make sure that you are familiar with a few pieces of information.

What Should Happen?

When you consolidate debt, whether it is through an online organization or through your own lending institution, you’ll are taking all the debt that you might have accumulated and putting it into one place. This will include debt from outstanding loans, credit card debt, mortgages or personal loans. This has the advantage of putting all of your debt in one place and making sure that you have lower interest, a lower monthly payment and overall , more money to spend at the end of the month.

You’ll find that when done properly, debt consolidation will give you the ability to live within your means and provide financial freedom without accumulating more debt in the meantime. Once you are in a position to comfortably make a monthly payment, you’ll be able to retire your loan much more quickly.

What Might Happen?

Many people do manage to make debt consolidation work for them, but the truth is, there is are also a number of people who do not! The truth is, far too many people see debt consolidation as a get out of jail free card, and because of that, they often wind up with the same problem that they had initially, which is living from paycheck to paycheck and amassing more debt just to get by.

One of the problems of debt consolidation is that it can give you a feeling of being free from debt, and this, combined with a credit card balance of zero, can make you feel a great deal more inclined to spend recklessly and without thought. You’ll find that in this situation that it is very easy to rack up even more debt and you’ll find that this is something that can get you into a situation from which getting out is even more difficult.

What Needs To Be Done?

Debt consolidation can go a long way towards making sure that your bills come back under your control, but only if you go into it with both eyes open. It can be a permanent solution if you see it for what it is, which is a tool that will give you some time to better your spending habits and to allow you to learn to live within your means.

Take some time to form good spending habits when you consolidate your debt. Shred your credit cards, and on;t allow yourself to take out new loans. Remember that loans will mean more debt and understand that this is not something that you can currently afford. Avoid new cars, or high end purchases and be wary of purchases that will rack up interest.

Wrapping it up

If you are considering debt consolidation, remember that this is only something that will give you the breathing room to change your habits. Financial specialists state that your debt should take up no more than 36% of monthly income after taxes and because of this, you’ll find that you will be able to live a lot better than you thought. If your debt consolidation can help you reduce it to this number, don’t let it rise again, and you’ll find that you are living better than you were!

Debt consolidation can be a powerful tool to help you figure out what you need when it comes to getting your financial affairs back in order, so make sure that you use it well!

If you have found yourself overwhelmed with debt you are not alone. Across the country and around the world debt is mounting as more and more credit cards, loans and education are over whelming people everywhere. Many of us are able to get more money than what income we have coming into the house or the business, and can not repay the debts fast enough as the interest continues to build. This is a spiral that is going nowhere but down.

The debt consolation companies that are out there are going to look to take what loans and debt obligations that you have, and they are going to put all of these together to make one larger payment with possibly less interest. What you have to be careful about is that while you are paying down on that debt, you don’t take out more credit cards or loans and build up another round of debt that you know you are not going to be able to afford at all. Payments add up fast, and debt adds up even faster.

Decide What is Best for Your Financial Situation

Some people think that bankruptcy is the solution but really that can be a bad decision for many people. If you declare bankruptcy you also have to pay a lawyer, give up some of the things that you purchased, and often times you are going to be put on payment plans for large purchase items that you can’t or don’t want to give up or back to the businesses you bought the items from.

Interest Charges and Understanding Mounting Debts

Mounting debts can be hard to manage. When you miss a payment the percentage of interest that you are being charged can go up. Making all of your payments on time, and at least the minimum is going to prevent the interest rate from rising even more.

Interest rates are going to vary from the home loan, to the car loan, to the credit card interest rate at the local department store. You need to look at these rates, find out if they are higher than 14% or 18% and then consider changing the money that you owe to other places where you can get lower rates. Refinance the house if you are paying more than 7% right now, refinance the car if you are paying more than 8% right now, and if you are paying more than 18% on a credit card you should find a new card with a lower interest rate and transfer the balances so you can make the most of your monthly payment.

Options with Debt Repayments and Consolidations

If you are considering consolidating your debts you need to look at if you are going to lower the monthly payments or if you are going to raise your total payments out. If you can’t afford the payments now, it isn’t going to make any sense to make a larger payment plan to consolidate your debts. Then look at the interest rates you are going to pay on that debt consolidation loan, is it higher or lower than what you were paying. When you pay attention to these details you can make your mind up on if debt consolidation is really an option for your financial situation.

Specialized loans to consolidate consumer debt give individuals in a variety of financial situations the ability to restructure, borrow money, refinance and consolidate debt into a more manageable payment structure.

These loans can be secured (usually by some form of property) or unsecured and come with a range of options all with the common end result of eliminating smaller debts and rolling them into one monthly payment.

Do you qualify for a debt consolidation loan?

The “qualification” for each loan package comes down to the type of loan – secured or unsecured – current financial condition of the individuals seeking the loan and the options spelled out in the loan documents. For example, if the loan is secured against the equity in a property the loan could be limited to only a percentage of the equity amount.

Consolidation Loans Not a Fix All

To qualify for a loan for the purpose of debt consolidation is not much different than any other type of consumer loan. Any time you look to go into debt or be “granted an extension of credit” as some consider it, you need to take it slowly, examine and understand all the Terms and Conditions of the loan.

Once a loan application has been submitted it will be reviewed and given a thumbs up or down to receive closer examination. This is sometimes referred to as “pre-approval.” If the loan application makes it through the pre-approval process and moves to a full loan approval and finally the complete funding of the loan the real work begins. As the borrower and one guaranteeing payment the actions taken in handling the money and payments play heavy into your financial future.

Smart money management is the only way any consumer, which includes you, can rise above the “debt grip.”

It’s a good idea to spend some time with a course on money management before going deeper into debt. The reason for a consolidation loan is to restructure your debt. With lower payments, work your tail off to pay the loan back as soon as possible and DO NOT take on more debt. It’s time for a lifestyle/spending change. Pay with CASH or do not purchase.

If your spending habits do not change you’ll soon find yourself deeper in debt and feel a growing stress each day. The trip to the mailbox each day will take on a new dreadful anxiety. The potential of “bankruptcy” looms closer.

Before the Loan

Before the application process begins you need to know where your money is bleeding from you pocket every month. Develop a “spending plan” which use to be called the hated word “budget.” A spending plan does not mean you live as a monk and in a cheap house. A spending plan lets you tell your money where it is going to go before you receive it. It allows you to run the money instead of the money running your life.

Start tracking every penny you spend each day by writing down the date, amount, what it was for and payment method. The once per week begin to categorize your spending. You may soon find out that lunch is costing a small fortune.

What does all this have to do with a consolidation loan? Everything! Once you have a clear picture of where the money is being spent you’ll be in a better position to examine loans, payment options, interest rates and start shopping for the best loan package.

You need to know how you stack up financially before making any financial decisions. What you owe, how much cash is coming in and what you can afford to pay! Always, Always always seek out solid counsel before making any financial moves.