Debt Consolitdation

Are you in over your head in debt? Are you considering debt consolidation because you can't find yourself getting out of debt before you die? You may want to think twice before diving at the idea of consolidating your debt.

If you do get your debt consolidated, don't plan on trying to purchase a house for at least 7 years. The reason behind this is that you will be treated as if you filed a chapter 13 bankruptcy to the mortgage lenders!

Why do something that you could do yourself? All that the debt consolidators do is to call each of your creditors and 'consolidate' the amount of money you owe to them. That is, they call up your creditor, and negotiate an amount to settle your debt for. They can usually negotiate around 70 cents on the dollar.

Credit collectors are vicious. If the credit consolidation company doesn't completely settle everything (even though they told you that they did) with the credit company, the credit collector may come after you wanting even more money!

Debt consolidation only addresses the issue. If you let another company take control of your finances and consolidate your debt, you are only addressing the issue and not the symptom. Let's face it, the reason why you are where you are is because you have spent to much money. If you never learn how to control your spending habits now, then you may be in this exact same position again 2 years from now!

Steps to avoid using these companies.
1.) The first step that you MUST do is to make a budget. Making a budget is the single most important thing that anyone can do. If you were to ask a millionaire one of the key essentials that they took to building wealth, they would most likely tell you that they always make a budget, review it, and stick to it. Making a budget is very simple. You just take out a piece of paper every week (or however often you and your spouse decides) and write down that weeks expenses. You write down everything from food, gas, clothes, accessories, etc. on a piece of paper that you will use for that following week. If for some reason you go over the amount you specified for a specific section, then you will need to call a meeting with your spouse to discuss what spendings for that week can be reduced in another category. Remember, you are trying to get out of debt. Once you establish exactly how much you WILL spend each week, stick to it!

2.) If you are considering debt consolidation, then you are more than likely behind on some payments and your credit rating is probably not the best in the world. You should call up your creditors yourself and try to negotiate with them a price in which to settle (most creditors will take around 60-70 cents on the dollar). Most of the time, these creditors won't be so happy. If this is the case, be very blunt with them telling them your situation. If they become very rude, hang up and nag them again tomorrow (after all, they probably have harassed you a few times if your behind on your payments). Once they finally agree on a price in order to settle your debt, don't take their word for it. Ask them to send you proof of the settlement in writing. If they don't agree to this, nag them some more tomorrow. It should be noted that this will hurt your credit score. However, people will not treat this as a chapter 13 bankruptcy if you wish to buy a house within the next 7 years.

3.) Take some debt management courses and talk to others who have faced similar issues in the past. The best course that I know of is Dave Ramsey's Financial Peace University. This course will guide you through everything about how to handle and get out of debt and also how to build wealth during your life! I also HIGHLY suggest that you read Dave Ramsey's book entitled The Total Money Makeover. You can pick up a copy at amazon for about 20 dollars.

Having debt can be very stressful. However, if you have a plan and take control of your money, you WILL get out of debt. You need to take control of your money instead of letting your money control you!