Myths And Truths About Debt Consolidation
Debt counseling and debt consolidation services are offered by various debt servicing agencies. You should be aware of the fact that these agencies are only a third person getting control of your already bad financial situation.
The may be helping you out but they are never sacrificing their own interests…
If you compare the prices of these debt consolidation services and regular debt related services or products you will find out that such agencies are generally priced higher. Since you are in trouble and not able to manage your finances on your own you are under a compulsion to adopt a reputed agency that might be able to help you to get out of debt.
But you should be sure that you understand the term, charges associated and the interest rate you have to pay along with the loan. Even if you are lowering the interest rate you might not be able to manage your debts and only postpone the day of reckoning. A balloon payment, for example, could mean that you have to take another loan and you will stay in the debt trap for an even longer time.
It may sound very appealing to have all your debts incorporated in a single installment with the offered loan package. But never forget to consider the financial compatibility and your ability to repay that amount. The interest rates are usually lower than those of credit cards but on the other side, the amounts you have to pay each month are higher than regular mortgage rates.
Make sure that the debt management agency will deal with all your debts. Many are tending to exclude liabilities on non-dischargeable child support, unpaid taxes or car loans. Thus they neglect the debts that are vital and your money is disbursed to the lenders whose claims could lead to your personal bankruptcy.
Home equity can save your taxes but be sure that if your debts are forgiven then these are treated as taxable by IRS. If 50% of your debt is settled then this part will be reported to the IRS as your income. Eventually, you might end up paying more taxes and saving no money.
With the way, things are going in the world today many people are interested in ways to save money. But most of them do not have the time or do not take the time necessary to read up on ways how to achieve this. Reading this means you do not belong to this majority.
There are several ways to save some bucks and if you combine all of them it could mean you have several thousand dollars more available at the end of the year.
Your spending habits are the first to look at. Are you eating at home or prefer to eat outside at restaurants? On your way to work, do you buy bottled or canned drinks from the gas station? Are you buying snacks regularly? These things are providing a huge saving potential if you buy your stuff at the grocery store and eat at home instead. Gas stations and restaurants may be somewhat comfortable but you are paying for the comfort you really do not need. Or just cut out some of the items you are consuming every day to save money. Believe it or not, this plethora of unusual pieces of stuff is really affecting the market and the business men’s vision towards money shaving.
Bad habits like smoking and drinking are other things to consider. Neither of these things are good for you but you know how society plays and we do have to keep up with it. A drink or a cigarette now and then are okay, but just imagine that smoking one pack a day costs you $1,800 each year. If you stop smoking you could save this money, which is a bang for a buck.
If you are living in urban areas and have the option to, try to use the websites and online stores of your local grocery store or just to e-stores. This way you can better plan your shopping and won’t be that much tempted to purchase stuff on impulse. Also, you wouldn’t need to go back to the store if you forgot something because you can look at what you have before actually being able to forget something. This saves not only time but also the money for the gas if you drive to the grocery store!