Debt consolidating personal finance

Even if the monthly payment stays the same, you can still come out ahead by streamlining your loans.

dating online dating dating sites - Debt consolidating personal finance

Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones.

In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable payoff terms.

“If you can get your bank to approve a loan, that’s great," says Tim Gagnon, assistant academic specialist of accounting at the D' Amore Mc Kim School of Business at Northeastern University.

"But your bank may not be looking to keep you as a client and your credit scores may not be high enough to meet their lending requirements.” If not, you should start by paying off your highest-interest debt first.

“If the principal is paid down faster [than it would have been without the loan], the balance is paid off sooner, which helps to boost your credit score,” says Freeman.

For example, say an individual with three credit cards and a total of ,000 owing at a 22.99% annual rate compounded monthly needs to pay

For example, say an individual with three credit cards and a total of $20,000 owing at a 22.99% annual rate compounded monthly needs to pay $1,047.37 a month for 24 months to bring the balances to zero.Home equity loans or home equity lines of credit (HELOC) are another form of consolidation sought by some people.Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.This works out to $5,136.88 being paid in interest alone over time.If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay $932.16 a month for 24 months to bring the balance to zero.“Typically, the loan has to be paid off in three to five years,” says Harrine Freeman, CEO, and owner of H. Freeman Enterprises, a credit repair and credit-counseling service in Bethesda, Maryland, and author of “How to Get Out of Debt.” These types of loans don’t erase the original debt; they simply transfer all your loans to a different lender or type of loan.

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For example, say an individual with three credit cards and a total of $20,000 owing at a 22.99% annual rate compounded monthly needs to pay $1,047.37 a month for 24 months to bring the balances to zero.

Home equity loans or home equity lines of credit (HELOC) are another form of consolidation sought by some people.

Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.

This works out to $5,136.88 being paid in interest alone over time.

If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay $932.16 a month for 24 months to bring the balance to zero.

“Typically, the loan has to be paid off in three to five years,” says Harrine Freeman, CEO, and owner of H. Freeman Enterprises, a credit repair and credit-counseling service in Bethesda, Maryland, and author of “How to Get Out of Debt.” These types of loans don’t erase the original debt; they simply transfer all your loans to a different lender or type of loan.

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For example, say an individual with three credit cards and a total of $20,000 owing at a 22.99% annual rate compounded monthly needs to pay $1,047.37 a month for 24 months to bring the balances to zero.

Home equity loans or home equity lines of credit (HELOC) are another form of consolidation sought by some people.

Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.

This works out to $5,136.88 being paid in interest alone over time.

,047.37 a month for 24 months to bring the balances to zero.Home equity loans or home equity lines of credit (HELOC) are another form of consolidation sought by some people.Usually, the interest for this type of loan is deductible for taxpayers who itemize their deductions.This works out to ,136.88 being paid in interest alone over time.If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay 2.16 a month for 24 months to bring the balance to zero.“Typically, the loan has to be paid off in three to five years,” says Harrine Freeman, CEO, and owner of H. Freeman Enterprises, a credit repair and credit-counseling service in Bethesda, Maryland, and author of “How to Get Out of Debt.” These types of loans don’t erase the original debt; they simply transfer all your loans to a different lender or type of loan.

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