Ways & How

how to finance & consolidate debt

how to finance & consolidate debt

Are your debts causing you sleepless nights and restless mornings? Do you check your mail box and see a number of bills and monthly commitments? If you do, then it is time for you to breathe in a new life. One of the most effective ways to walk through a debt-free life is to learn how to finance & consolidate debt. Debt consolidation involves the service of a company that will negotiate with your creditors on how to pay off your obligations. However, you can do the same by yourself, if you don’t want to incur additional expenses in consolidating your debts. To gain a better understanding about debt financing and consolidation, read on below.

  1. Make a systematic summary of your obligations. Itemize your monthly obligations and rank them from the most burdensome down to the least troublesome. Your list should include, but not limited to, your mortgages, credit cards, auto loan, monthly bills, and other personal debts. Include also the amount of interest of your monthly obligations and when they will fall due.


  2. Scrutinize your budget. Once you have made a summary, compare it to your current budget. You will find out that your net income is less than your expenses. Based on such findings, you can start making adjustments by eliminating those unnecessary expenses that you can still live without.

  3. Consolidate your debts. Categorized your debts and lump them into one according to their category. If under one bank you have a credit card, personal loan, housing loan, or car loan, ask the bank to consolidate all your monthly obligations and you will pay only once every month. With this procedure, you can do away with the different bank charges every time you default payment.

  4. Hire a private company to consolidate your debts. As mentioned, debt consolidation can be done either personally or through a company. If you engage the services of a company, they will be the ones to negotiate with your creditors to arrange for a single payment scheme for all of your debts. The private company will necessarily act as an intermediary between you and your creditors in working out a solution for the settlement of your financial obligations.

  5. Opt for automatic payment schemes. You should consider making an arrangement with your creditors to automatically deduct your debts from your monthly paycheck. Before doing this, you must make sure that your obligations are way below your income. In that way, you will no longer have to worry about how much is left in your monthly paycheck.

  6. Pay your bills as they fall due. Neither wait for the grace period to come nor for the final notice to pay your obligations. From the very start, you already know when your obligations will become due. You only have two choices - to pay ahead or to pay on time.

  7. Avoid incurring new debt in payment of another. You will never become debt-free if you counter a particular debt with another debt. Remember, the main purpose of your debt financing and consolidation is to merge your debts into one and pay them under a single payment scheme.

Now that you know how to finance & consolidate debt, make yourself debt-free. Do not be a captive of your monthly bills. Once you become debt-free, do not commit the same mistakes again. Manage your finances properly by tempering your expenses. Identify the difference between "needs" and "wants." As much as possible, spend for your "needs" only. Mind you, it is just a matter of living within your means.


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