Debt Consolidation Advice

Here is some debt consolidation advice that has stood the test of time. Let's say that you're $6,000 in debt to credit card companies, utilities suppliers, and friends and family, and you only bring in around $2,000 a month via your income stream. Given that your debts alone require a $125 worth of interest servicing per month, you need to work assiduously to reduce your balances and get your financial plan in order.

Experts at giving debt consolidation advice instruct their clients to consider a host of tactics in situations like this. You can negotiate with your creditors or your utility company to lengthen the term of your loan arrangements, reduce your monthly charges, or even potentially excuse some of the fees or service charges to help you get your life in order. You may also write creditors letters requesting debt assistance. Assuming that you make a good effort to meet them halfway, you may be able to knock down your debt by 20 percent to 30 percent.

Of course, to consolidate your debt this way, you generally need to present a lump sum of 70 percent to 80 percent worth of your loan upfront, and there are many legal pitfalls here. Get professional debt consolidation advice form an attorney or an accountant if you go this route, and check your credit reports to make sure that your cleared history shows up in the bureaus' files on you.

Another time-tested piece of debt consolidation advice involves tackling one major issue at a time. If you attempt to service all of your debt simultaneously with a limited amount of funds, you could stretch yourself too thin, leaving you without enough money to buy month-to-month essentials. This in turn can stress you psychologically and ultimately lead to yet another spiral of spend and owe.

Instead, figure out how to deal with one creditor at a time. Resolving each issue will reduce your paperwork and lower the amount of red flags you are sending out to other creditors. Whether you want to tackle the big credit card debt that's been brewing for years or your urgent utility bill debt is up to you, your family, and your debt management counselor.

A final piece of debt consolidation advice is axiomatic and in many ways very intuitive. Create the conditions for budgetary health by checking in with your spending and savings plan at least once a month. This way, you won't be caught off guard by interest rate charges, you'll know precisely where your money is going, and you'll be able to catch inaccuracies, errors, or fraudulent charges on your accounts before they metastasize into larger problems.