Debt Consolidation: Here Is The Whole Truth You Need To Know
By Angela Sanders Saturday, December 21, 2013, 11:42 PM EST
Not all of us are born with a silver spoon in our mouths. Truthfully, even those who have lots of money aren't necessarily great at controlling their spending. Whether you are rich or poor, debt consolidation can help you deal with your financial follies. This article will show you how.
Do your research on your potential debt consolidation companies.
Not every one of these companies is best for your scenario. Some are not even reputable--there are a lot of "fly by night" operations in this market. Don't fall into the trap. Research the companies fully before making any decisions. Check out different debt consolidation companies. While you may think they all do the same thing, that is not true. Each has their own different set of rules, regulations and fees. Before you sign up with any of them, make sure you compare them to find out which is the best for you.
Talk to friends, family and coworkers. You aren't the only one with money problems, and chances are that someone you know already has some experience with debt consolidation. This is a great way for you to find a company you can trust, so that you can avoid using a less than reputable company. To consolidate your debt, try taking out a personal or signature loan. This has become a limited option due to the credit crunch, however. Many lenders that used to offer unsecured, signature loans for consolidation do not anymore. If you find one that offers this option, be sure it's not a high-interest loan, even if it helps you lower monthly payments by extending the terms.
Using your 401-K, you can pay off your debts. It's crucial that you pay back any money to your fund that you take out, though. You have to pay taxes and fees for a penalty if this doesn't occur. Remember that debt consolidation isn't for everyone. You're a good candidate if you have multiple debts like medical bills, credit card bills, personal loans, unsecured debts, collection accounts, etc. Consider your interest rates because if they're over 15%, you're paying too much with financial charges every month, which is money that you could save or use for your retirement account. Finally, consider if you have a hard time making minimum payments, have gotten behind recently, or are close to your limits. If these apply to you, debt consolidation may be a solution.
Find out if your chosen debt consolidator is also a licensed credit counselor. Check the NFCC for a listing of licensed credit counseling companies. This will allow you to rest easy that the company you are using is trustworthy. When evaluating whether to use a certain debt consolidation agency, see if they are licensed by an outside organization, preferably the NFCC. Test them as well by seeing if they know how your debt consolidation situation is going to be affected by your state's laws. Each state is different, and you need a licensed and certified debt specialist that knows about the different laws by states.
Learn about the privacy and security practices at any debt consolidation company you consider. It's important that you know that there is a policy in place, even if it's not something you think about all the time. You are going to be giving them very personal information, so make sure that the information is protected. Do you know what got you into this much debt? You must determine this before taking out a consolidation loan. If you are unable to determine the cause, you will likely end up in this boat again. Find the problem, figure out how to fix, pay your debts and find financial freedom.
Before using a debt consolidation company, be sure you ask about their fees. Each of these fees should be explained and included in a written contract. Make sure you inquire about how much each creditor will be paid each month. The company handling your debt consolidation will prepare a payment schedule, and you should get a copy so you can see how much each creditor will be paid monthly.
For many people in the St. Louis area, a 401(k) retirement plan can be their largest source of retirement income. Jake Horseman can help you manage your 401(k) plan more effectively, even providing you with options for 401(k) rollover in St. Louis. If you don't currently have a 401(k) plan in place, we can work with you to set one up.
What Are 401(k) Retirement Plans?
A 401(k) plan puts you in control of your retirement account. You manage how much money you will have during retirement. While setting up a 401(k) in St. Louis may seem intimidating to younger workers, the first step to take is to start contributing to your plan.
Many American workers choose to participate in the retirement savings plan offered by their employer. With these plans, employees can save money toward their retirement on a tax-deferred basis. The most common employer-sponsored retirement savings plan is a 401(k). With a 401(k) plan in St. Louis, money is deducted from your paycheck before taxes are withdrawn, effectively lowering your taxable income.
For most American workers, their 401(k) plan can be a large source of their retirement funding. By setting up a 401(k) in St. Louis through your employer, your money will be automatically deducted from your paycheck before taxes are withdrawn. This will lower your taxable income at the end of the year. Jake Horseman takes great pride in helping younger workers more effectively manage their 401(k) plan in St. Louis.
Following debt consolidation, budgeting your money wisely will help you keep future debt to a minimum. Most people get in over their heads by over spending with credit cards, so learn to work with money you have rather than borrowing. Doing this will also make it easier to pay off your debt consolidation loans and improve your credit score.
If your home is mortgaged, a refinance may help tou to steer clear of consolidation loans. The money you save on your mortgage payment should be used to cover your most outstanding debt. This is cheaper and quicker than debt consolidation.
Regardless of how you ended up in debt, the fact is that you are having trouble paying it off. That is why you found this article on debt consolidation and why you read it in its entirety. Now you just need to put the knowledge you have gained to use to get rid of that debt and free yourself from burden.
About the author:
Contact Jake Horseman to learn more about maximizing your 401(k) plan for retirement. We proudly serve St. Louis, St. Louis County, St. Charles, St. Charles County, Chesterfield, Creve Coeur, Ballwin, O'Fallon, Florissant, and Hazelwood.