Debt Consolidation

Being in debt can be overwhelming and may seem like the amount of money you owe is just too much. These are some questions that might be in your mind:

  • Are you struggling to keep up with minimum payments?
  •  Are your interest rates rising continuously?
  •  Does your debt keep you awake at night?
  •  Are you looking at consolidating all your debts into one monthly payment for peace of
    mind?

If you answered yes to any of these questions and you feel like your bills are spiraling out of control, then a debt consolidation program may be the best option for you.Consolidating your debt in to a single low-interest monthly payment can save you thousands of dollars and speed the process of paying off debts. As a bonus, over a period of time you can improve your credit.
Debt consolidation is considered by many experts as the first step in the process of debt elimination and the prelude to improving your money management skills. The following table demonstrates the savings that are possible from a typical scenario:

Sample Debt Consolidation

Creditor Balance Payment
Mortgage $ 185,000.00 $ 1,030.81
Line Of Credit $ 185,000.00 $ 10,000.00
Bank Loan $ 185,000.00 $ 505.35
Credit Cards $ 50,000.00 $ 1,500.00
Total Debt $ 270,000.00 $ 3,336.16
Creditor Balance Payment
Mortgage $ 275,400.00 $ 1,246.00
Line Of Credit $ – $ –
Bank Loan $ – $ –
Credit Cards $ – $ –
Total Debt $ 275,400.00 $ 1,246.00
Monthly Savings $ 2,089.00

This example is for illustration purposes only and it was based on the following assumptions: Before mortgage rate of 5.39% calculated semi-annually based on 30- year amortization; Bank loan 8% rate and payments spread over 5-year term; Line of credit and credit card payments equal to 3% of outstanding balances. After mortgage rate of 3.59% calculated semi-annually amortized over 30 years.

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