Debt Consolidation

The rising cost of living has caused consumers to take on multiple debts such as car loans, student loans, high interest credit cards and other loans. Sometimes simply keeping track and paying these debts off can be time consuming and a bit stressful.

Consolidating Your Debt
One solution is debt consolidation. This option is available if you own your own home. You would take out a debt consolidation loan that would essentially pay off the rest of your other loans and just leave you with the home debt consolidation loan to pay off. There are several huge advantages in consolidating your debt with the equity of your home. In order to be approved for a debt consolidation loan, you will need to have some built in equity in your home. In a debt consolidation, the lender puts a lien on your home until the loan is paid off.

1. Lower Interest
Credit card interest rates can get as high as 20% and car loan interest payments can be as high as 8 to 10%. A debt consolidation rate is generally between 6-8% depending on your credit history and score.

2. Tax Savings
The debt consolidation is a type of loan that the IRS allows you to deducdt the interest off your taxable income. The savings can quickly add up month over monthly, lowering your actual interest rate you are paying. For example, if you paid $5,000 in interest and you are in the 25% tax bracket, you may be able to save as much as $1,250 a year off your taxes.

Post Debt Consolidation
After you get a debt consolidation, review your finances to make sure you don't put yourself in the same situtation by overspending and maxing out your credit cards on unneeded material goods.

Note: debt consolidation is commonly misspelled as debt consoldatin, debt consoldation, debt cosolidaton, debt consoldiation.