Tag Archives: counseling
Credit Counseling vs. Debt Consolidation – Which is right for me?
Debt consolidation and credit counseling are similar services that assist individuals in getting out of debt.
Debt consolidation agencies help to minimize interest rates and therefore the monthly payments. The replacement of several monthly loans by a single loan at a lower interest rate and sometimes with an extended repayment period can be of significant assistance to a person in debt. A single secure loan can lead to the interest rates dropping by as much as half. The debt consolidation company interacts with the collection agencies and credit card companies on behalf of their client and along with a reduced rate, they can also negotiate for elimination of late fees and a reduced balance. Debt consolidation is not applicable to secure loans such as mortgage loans and car loans but is very useful for unsecured credit card loans.
Debt consolidation is received well by the creditors who prefer it over bankruptcy. Debtors can get out of debt by using debt consolidation and maintain a good credit record, something which would not be possible if they filed for bankruptcy. Debt consolidators may charge a fee upfront or charge service fees; given that most debt consolidation companies are non-profit, these fees are usually quite affordable. Debt consolidation is ideal forsome people who wish to get out of a debt as quickly as possible without juggling their finances in a major way.
Credit counseling organizations also assist consumers in clearing their debts. Credit counseling organizations were first started by the credit card industry that was looking for a way to ensure that their debtors not file for bankruptcy. Consumers who participate in a credit counseling program normally have a certain amount of debt with reference to the monthly income. One may not qualify for a credit counseling program if in the creditors opinion the debtor has the income to make the payments.
Credit counselors interact with the creditors on behalf of their clients to secure a revised monthly repayment schedule, a reduction in the interest rate, or a waiver of the interest charges, if possible. Credit counseling services assist with unsecured debit like credit cards, auto loans, medical bills, attorney bills, etc. Well-established credit counseling companies can even negotiate with creditors on behalf of those who have defaulted on secured debt repayment and help them to pay the arrears as per an agreeable plan, thereby avoiding foreclosure and repossession. Credit counseling is recommended for those who wish for a complete alteration in their finance management and require assistance from a third party to assess their financial options. It is not uncommon for creditors to pay the credit counseling fees on behalf of the debtors in order to encourage them to repay the debts. Unlike debt consolidation services, credit counselors provide useful advice for not only getting out of debt but also staying out of it
Ways To Secure Yourself For A Financial Emergency
One of the wisest moves is to make preparations for any possible financial emergency. Financial experts advise everyone to set aside a certain amount of funds that is enough to last for a minimum of 6 months. Hence, if tragedy happens like loss of job, you have the assurance that you have emergency savings that can be used to cover for you and your family until you can get a new job or other means of earning your income.
Can it really be possible to save money without using paychecks? How can you be more prepared to face financial trials? Here, we’re going to discuss some tips to help you secure yourself for a financial emergency.
Open a checking account. Send a portion of your paycheck to your deposit account each month. Thus, you can have something to rely on during emergencies.
Take out a personal loan from a credit union. In case you need emergency money, you may turn to a credit credit union to ask for financial assistance instead of payday loan lenders. Compared to banks, credit unions have a more relaxed policy and lower interest rates for borrowers.
Seek credit counseling. There are certain credit counseling agencies which are government accredited. They offer counseling services for a lower cost. If you have problems controlling your expenditures or handling your credit card and other financial concerns, it’s best to ask for assistance rather than to let yourself get stuck in.
Watch your spending. The best way to save money despite having limited paycheck is to control your spending. To start with, one can make a list of all the monthly expenses and subtract it from your monthly salary. It may be important for you to make adjustments on your expenses to stretch your budget. This needs self-discipline on your part to avoid unnecessary splurges on luxuries.
Apply for insurance. Secure a home insurance, personal insurance, and car insurance. Medical bills can put you in debt in just a few weeks if you don’t have a health insurance coverage. So, it’s best to save a certain portion of your monthly salary for your insurance payments as part of your financial plan.
Take out a Home Equity Loan. Another source of emergency funds that you can use is the equity of your home. But, you have to be aware that an equity loan puts your property at risk. If fail to keep up with the payments, in the end, you’re most likely going to lose a home. Hence, it is important to consider all your options first if you have any plans of using your home equity for a loan.