As we get out of collage and grow older, our needs expand and time comes in life when we need a car and then a house to live in. Expenditure builds up very fast. We Apply for one Credit Card for emergency and before we know it, our pocket is full of credit cards and we have many supplementary credit cards too for our wives, girlfriends and children. We also undertake personal loans to purchase luxury items like furniture, home theater, backyard swimming pool etc. etc.
Whenever we acquire a new line of credit, we are actually reducing our future disposable income. This disposable income keep shrinking till our situation get very desperate.
If things keep going well (we don’t encounter a major problem with our health or job. And we are also lucky enough to survive the mid life crisis that is so common these days that every ones seems to have it. It’s more common than influenza.) and we do keep paying all our obligations on time i.e. Utility bills, mortgage payments, credit card bills, chances are that we do have a very sound Credit Score. Which is quite a good thing, but wait.
Let’s sit down and check each and every debt account. Let’s average our minimum monthly payments and accompanied interest rate. Mine average is quite horrible. It’s 27%. I can bet that your’s will be way more than your best guess.
“What is the problem with these credit card companies” I am now getting angry at them “They are getting money from central bank at little more than 2% and charging me upto 30%?????” Such a banking spread is really criminal. but since I can’t do anything about them, Let’s see what my options are..
After little searching on Internet, I came up with some great options to break out of current situation. Best among them is to seek a debt consolidation loan so I can all these monthly payments into a single payment and also reduce my effective interest rate to a reasonable level.
The Great thing about debt consolidation loans is that they will sum up all of my debts and one monthly repayment is much lower than the sum of all the minimum payments I currently have to make to all of these credit card companies. I have only one due date to remember and only one check to write… It is a major stress remover indeed.
I have already spoken with a few banks. They are saying that because I have a sound credit history and a good credit score they will be more than happy to consolidate all of my credit card debt into one loan. They said that main reason they are very eager to get my account is that I have proven that I can make the monthly repayments on time and therefore will manage just one monthly repayment without risk.
Even in dire situations too, where the debt collectors are up your behind you, debt consolidation loan is still a great option. Although you won’t be able to get lower interest rates but still Its good in the sense that debt collectors will be off your ass and your monthly minimum payment will be manageable too.
If you own a house and have the mortgage on it which is less than the actual value of home, you have an option of getting a home equity loan. Unlike credit card, this is a secured loan and the interest rates a bottom low on it. By taking out this loan you can consolidate all your debts into the one. You will be able to pay off all your outstanding debts immediately and will be able to save thousands of dollar is interest payments.
If you dont own a house then you will need to look for some other sort of secured loan to consolidate your debts so you can pay off all of your outstanding debts. paying off outstanding debt is important and vital. 
To secure a debt consolidation loan you will have to do some research on Financial Institutions and view their web sites to find out their eligibility criteria as well as terms and condition of the loan. It is very important to read the disclosure and Term and Conditions. If you don’t understand what a particular term means, don’t skip, Just search for it in google or look at Wikipedia.com. Overlooking an important term can haunt you for years to come, so be careful.
Most of these web sites do have a loan calculator of some sort. Normally it is very easy to use. Use it to calculate the monthly repayments, the amount of money you may borrow as well as they give you a good idea of interest rates.
Once you have all this information you should decide which banks or financial institution you will work with and start filling our the loan application. You will also have to arrange all the supporting documents as required by the lender.
Once you get consolidation loan, you must clear all outstanding credit card debt and Cut your credit cards and close all lines of credit so that you may not fall deeper into debt. The point of no return starts beyond that…
Financial planning is a vital tool, use it to stay clear of debt. Try to save yourselves from getting too down in debt. If you get there anyhow then seriously think about bankruptcy as a good option. Sooner you do it.. better off you are..
A debt consolidation loan is one monthly repayment and one lower interest rate that you can use to consolidate your debt.
