Why Consolidate?

Why should you consider consolidating your debts?

Are you tired of bills piling up around you? Do you feel like your money GOES faster than it comes in? Those are probably the top reasons you should consider consolidating your debts. It's all about FREEDOM! Freedom to breathe every month. When you consolidate debts with your new refinance loan, you can pay off those debts and have one, affordable monthly payment. That's right - one monthly payment with one low interest rate. And the interest you pay is usually tax deductible. (You'll want to check with your accountant or tax advisor to find out if the interest you pay will be deductible.) Remember, we want to improve your financial life. Debt consolidation means less interest, less hassle and LESS STRESS!

The best part of a Debt Consolidation loan is that you only pay one payment to one creditor and it allows you to use your monthly savings to eliminate debt, build a nest egg, or invest for the future. Your loan will be secured by your home and the interest may be tax deductible (Consult with a tax professional). These loans do require that you have some equity in your home. If you don't have equity in your home or you don't yet own a home, there are consolidation loans available that are not secured by your home, but they typically max out at $15,000 and carry high interest rates.

The hard truth is that more and more Americans are finding themselves falling behind on their payments. Recent layoffs are affecting hundreds of thousands of people. Virtually everyone is finding it difficult to make ends meet. While prices continue to rise due to inflation, average incomes are steady or declining. Literally tens of thousands of Americans are spending more than they earn. The number of personal bankruptcies have skyrocketed as more and more people live paycheck to paycheck and use credit to fill in the budget "gaps".

Try this......Add up all of your existing loan payments and divide by your monthly income. If that number is over 40%, you need to act quickly to resolve your debt situation before it becomes overwhelming.

If you're like me, every time I pick up my mail I have at least two offers from credit card companies saying something like:

"CONGRATULATIONS! YOU ARE PRE-APPROVED FOR A CREDIT LINE UP TO $15,000 with an Introductory rate of 3.9% on Balance Transfers. Just send in your application and we will send your balance transfer checks."

Do you realize that if I had answered every one of those offers, I would have over a million dollars in credit card debt by now? YIKES! Many people do accept those offers and are now drowning in debt payments. I speak to several people every day who ask me for help to payoff their debts and lower their payments. The next time you receive an offer like this, JUST SAY NO! It will only exacerbate your situation, not to mention what it does to your credit scores! (See Credit 101)

If you have found yourself in this situation, please accept that YOU ARE NOT ALONE! The fact that you are at this site reading this page says that you are ready to end the cycle. We specialize in helping our clients to consolidate debt and find their way down the pathway to financial freedom. When we consult with our clients regarding Debt Consolidation loans, we will also develop a customized plan for debt elimination. We print it out and give it to you. Keep it handy, near the checkbook, where you can refer to it whenever you may feel out of control or off track. We also provide you with a FREE e-Book entitled "Sound Budgeting Principles" so you can stay on track.

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Here is an example of what a Debt Consolidation loan can do:

CURRENT LOANS		NEW LOAN
Home Value $250,000		Home Value $250,000
Mortgage Balance $150,000		Mortgage Balance $200,000
Interest Rate 6.5%		Interest Rate 4.5%
PAYMENTS		PAYMENT
Mortgage $948.10		Mortgage $1013.37
Auto Loans ($30,000) $850.00
Credit Cards ($20,000) $600.00
TOTAL: $2398.10		TOTAL $1013.37
	MONTHLY	SAVINGS: $1384.73

Based on a 5/1 ARM, Rates based on credit scores and worthiness, Rates may be higher than shown

It is imperative that you do not wait until you are 1, 2, 3 or more payments behind on any of your loans! Late payments can destroy your credit score and make it harder for you to secure financing. If this is already the case, we may still be able to help. Contact us and let us know the whole situation, with all of the details. We will let you know what we can do to help.

When there is equity available in your home, refinancing is the smartest way to consolidate debts. You can add your debts into the amounts owed when you refinance. Your new monthly payment will carry one low interest rate, and it will make paying the bills easier too. Interest rates will be much lower than any other consolidation options. Let's look at the example above. Say you owed $20,000 at 8% on an auto loan and you owed $10,000 at 15% on a credit card. Your monthly payments on those two debts would be about $908.29. If you were to take that $30,000 and payoff the auto loan of $20,000 at 8% and the credit card of $10,000 at 15%, your monthly savings would be $728.42! If you have equity in your home and good credit, this is your best option.

If you carry a balance on your credit cards, paying those balances off should be your top financial priority for three important reasons:

First, it gives you a guaranteed rate of return of as much as 21%, depending on the rate of the card. So paying off $5,000 at 17.5% is like investing that same $5,000 and receiving a return of 17.5% on that money. You are investing in yourself. Will your bank pay you a rate like that?

Second, paying off debt gives you flexibility. If you're stretched to the limit on your credit card and consumer debts, you have no margin for error and no room in the budget for emergencies.

Third, once your debt is paid off and you have freed up some monthly cash flow, you can plan for the future. You may want to save for a child's college education (or your own!), a dream home, or retirement. You will now have the ability to put the powerful compounding interest work for you, instead of your creditors.

YOU ARE NOT ALONE!

Please realize that most of us have experienced money problems at some point. Some people just have quirky ways of handling their finances which don't usually lead to serious financial woes. But when serious woes are upon you, they necessarily must be faced as the first step to getting out of debt and onto safer financial ground. This is so important!