Debt Relief From Debt Consolidation

If you are up to your neck in debt, there may seem like there is no relief in sight. In fact this is not necessarily the truth. There are ways to take all of your stifling bills and roll them up into one neat package by using debt consolidation in two very popular forms Home Equity Loans, Refinancing Loans, and a Consolidation Credit Card. All of these instruments provide the debtor with one thing "relief" from the current debt by shrinking it down to a single manageable debt.

Using home equity to consolidate debts One of the popular methods of debt consolidation today is the Home Equity Loan. What happens is that the debt is extinguished using the equity from a homeowner's home. A loan is created outside of the mortgage in order to satisfy the debts. Should the homeowner default on the loan, their house is in jeopardy of being foreclosed upon if that loan is not satisfied with a specified amount of time.

Refinancing loans People often consume the debt by rolling it into a new mortgage. This way the house costs more money to the borrower, but the debt is extinguished at close and the debt is neatly rolled away into the mortgage securely. Upon settlement of the loan, the debts are paid in full and satisfied. The clock on the mortgage is reset to day one.

Credit card consolidation A low interest credit card is offered to the borrower to include any outstanding credit and loan balances. The interest rate is a low fixed rate for a period of up to one year, upon the year's end it will resume at its normal rate. Upon acceptance and terms the account should be closed once paid in full and payments be made directly to the new credit card provider. Some people have been able to master paying off one credit card with another to keep the debt revolving and interest rates low. Some people fail to close out the previous creditors account and run them back up again as well.

All three of these options provide solid relief for the debt and help them reconstruct and manage their debt better.

By Jakob Jelling http://www.cashbazar.com

About The Author

Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate.

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How to Create a Household Budget

If you don't have an actual "budget" in place for your household, you may be completely scared whenever you hear someone say they're "making a budget". Typically, the people who would most benefit from having a budget are the ones who are most afraid of the idea. If you're living paycheck to paycheck, and feel like you never get caught up financially, a budget is probably the perfect solution. Living without a budget seems easier. You get paid, you pay whatever bills you can afford to pay, you spend some on take out food or entertainment and whatever you can't afford to pay will wait until the next time you earn money. When there is an emergency- your car breaks down, you have an unexpected medical expense or any other unplanned expense- you could just charge it and pay it off later.

Having a budget will eventually eliminate the common scenario of not making enough money to cover your bills and living expenses, if you commit to making this lifestyle change. As with any "habit" change, you have to give it your all for a good 30 days or more before it will become automatic, so don't wimp out on week two and say it isn't going to work!

Step One: Figure out how much you make. Find paystubs or check registers and determine how much money your household brings in on a monthly basis. If you have variable income, find your average monthly income by adding all of your monthly income totals together and dividing by the number of months you added together. Use this monthly income as the amount of money you have available to spend, pay bills, save, etc.

Step Two: Figure out how much money you pay out each month. This is the scary part! There are many households that don't actually know how much they pay to live each month. Get all of your paperwork together, statements, check registers, etc, and add up how much you pay to creditors every month. Also figure out how much it costs you to live, including rent or mortgage, utilities and groceries. If you have to pay it, include it on the list.

Is the amount of money you pay out each month larger then the amount of money you earn each month? You are not alone, and while at first you may think you can't have a budget because of this situation, the fact is a budget will FIX this situation and reverse those numbers!

Step Three: Figure out where the rest of your money is going. Try to keep track of where you are spending money that's outside your necessities for a few months. How much money are you spending on take out food? Coffee from the coffee shop? Extra purchases at the grocery store? Restaurants? Get an average monthly amount for the unnecessities and see where you can cut back to reduce how much money you spend unnnecessarily.

Step Four: Make adjustments to how much you pay out to each of your creditors. If you have overdue balances on some of your accounts, you want to send those accounts as much as possible each month until they are caught up. Call credit card companies to see if you can pay them a little less than what you've been paying for a few months in order to correct your budget. Most of the time they are willing to work with you as long as you send them money every month. Check with utilities to see if they offer a "budget" plan, or reduced payment plan that makes it easier to pay your expenses over the course of a year in equal payments, rather than paying large heating bills in the winter and none in the summer. Reduce unnecessary spending categories to the absolute minimum -but be careful not to remove entertainment completely as you will quickly fall off the budget wagon if you have no fun in your life!

Step Five: Stick to it. Once you've got the numbers set for each of your creditors and monthly expenses, stick to it as close as you can. That's what budgeting is. For the first few months, you may have to move numbers around some more until it works; but the idea is you are planning what you do with your money and minimizing impulse spending and reckless money management. As you pay off debts, you'll have additional income each month that can be applied to other debts; you can increase your entertainment category and contribute more to your savings. Before you know it, you will not be living paycheck to paycheck.

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