title:Debt Consolidation Plan – Your Way Out Of Debt author:Gary Gresham source_url:http://www.articlecity.com/articles/business_and_finance/article_4081.shtml date_saved:2007-07-25 12:30:07 category:business_and_finance article:

A debt consolidation plan be the solution to getting out of debt. Getting into debt has never been easier than it is in today’s society. No one wants to wait until they’ve saved the money to buy the things they desire.
Even though a debt consolidation plan takes a little time, it can be an excellent way to consolidate your way out of debt. It’s tough to know what to do when you see the offers to get you out of debt without the wait arriving daily in your mailbox.
The offers of low interest rates and incentives if you apply now for the loan or credit card. Unfortunately, once a few of these bills are coming in each month, they start to add up to a substantial sum which becomes difficult to pay.
With a debt consolidation plan it’s possible to take all of these smaller debts you owe on credit cards and pay them off so that only one lower monthly bill is coming in each month.
One way of doing this is to take out a debt consolidation home equity loan. With this you release the equity you have on your home. This means that the difference between the value of your property and the amount outstanding on your home loan is the equity.
If there is more value then the existing home loan, you have positive equity which can be used to provide collateral to consolidate your debts. But make sure you do your homework before you put your home at risk by putting it as collateral to a loan.
You can’t afford to miss any payments on this debt consolidation home loan, so make sure you afford to pay it within your budget. Make a list of everything you pay each month, including all household bills, insurances and groceries.
Do not include the debts you are going to pay off with the consolidation loan. Then add on an amount for clothing, gifts, outings, entertainment, travel etc.
Take this amount and add a percentage for unexpected expenditure of say 10%. The total should then be taken from your monthly income. The remainder is the amount of income you have available to repay the consolidation loan.
Check out the various consolidation options available and choose the one with the best debt consolidation loan rate. However, make sure that this isn’t a rate which is only the best in the short-term as this could affect your ability to pay later if the rate rises dramatically.
Remember this is not going to be a short term loan, and your home is at risk if you are unable to keep up the payments. Once you have chosen a debt consolidation plan that suits your needs, and are sure that you can comfortably afford it then make an appointment with the lending company.
If you want to improve your financial situation, a debt consolidation plan can take the stress out of your monthly bills.

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