Debt Consolidation Advice – How To Organize Your Debts To Save Thousands of Dollars per Year

Debt consolidation advice is one of the hot topics on the Internet. The recession has caused a lot of people to turn to credit cards and short term loans to maintain their lifestyles. Now that things are getting better, it’s time to get your finances under control. So lets take a look at some of the ways you should be doing debts management.

The first thing to do is to gather all your monthly bills and make a list of how much you owe to each and every debtor. One of the best ways to do this is on an Excel spreadsheet. Make column headings for Debtor name, total amount owed, minimum monthly payment, interest rate charged and payment date. Due to new banking regulations, your credit card payment is due the same day every month so the credit card companies can’t trick you into paying late fees by changing the date your payment is due each month.

The reason I like to do this on a spreadsheet is so you can sort the information easily. You’ll want to sort the spreadsheet by the interest rate charged. You may not realize it but nearly every credit card company has raised their interest rates or put you on adjustable rate payments. They were very tricky about it. Generally they sent out a change of terms that will take place in the future. You had the opportunity to opt out of the change and quit using your card or be forced to accept the change by continuing to use your card.

One real eye-opener is that most of your credit cards are probably charging you 23.99% or more! If you owe $1000 on your credit card, you will pay up to $200 in interest this year if you don’t get it paid off. Considering that many people owe $15,000+ in credit card debts spread over several credit cards. This means you will pay up to $3000 just in interest fees! This is why you need to get these things paid off right away.

The best situation would be to get a single loan large enough to pay off all your cards at once. Most fixed rate loans carry a rate of less than 10% if you have good credit. It doesn’t make much sense to go to a finance company because most of them are charging the same interest rates as your credit cards. You won’t be saving anything.

If you can get or already have a Home Equity Line of Credit, take an advance and pay off all your cards. Home Equity Lines, also called HELOCs offer lower interest rates because they are more secure. If you don’t pay them, they can foreclose on your home, so be very careful if you are going to use this source.

On the other hand, HELOC’s are an excellent choice because not only do they offer you a lower interest rate that will save you tons of money in interest expenses, they are also tax deductible. Please consult your tax advisor for more information on how this might affect you.

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