Debt Consolidation Advice – A Trick To Get The Recession To Work In Your Favor To Pay Your Bills

July 15, 2011 by  Filed under: Debt 

I guess the reason you are here is you are looking for some debt consolidation advice to help you get your financial house in order. That’s great. Like they say about many things, the first step to solving your problems is admitting you have a problem that needs to be solved.

How did you get in this situation? Was it overspending on your part. A lot of people love shopping and just can’t stop. They buy something almost daily. Sometimes is something small or needed but many times they buy just to buy. They have tons of stuff they don’t need or use. For these people, spending is an addiction. If this sounds like you, you really need to get that problem solved as well as getting your debt consolidated.

Another scenario is the person who lost his or her job. They were fine with their monthly payments and then suddenly found themselves with higher payments than income. Or possibly they have enough to pay current needs like housing and food but don’t have anything left over to pay for other necessities. These end up going on a credit card. After a while you are taking cash advances on your credit card to pay your other cards. These folk haven’t missed any payments yet so their credit is fine, they just are slowly sinking in debt. These are the people this trick will work best for.

To understand how this works you need to understand banking and credit ratings in general. First of all, banks do not want to lend you money unless you show you can pay them back. If you have lost a job or a substantial portion of your income, you really should see if you can get part-time work to make up the difference.

This does not mean you have to volunteer down at the car wash. There are tons of online jobs you can do from your home in your part-time. For instance, you can easily get paid for writing articles just like this one for marketing companies. This article is not about that, so I’ll let you explore that on your own. The point is you need to get your income up to snuff to show the bank you can make the payments.

If you own a home, the next step will be easier than you think. We are in a recession. To give the economy a jump start, the government has applied QE1 and QE2. They have lowered interest rates to almost zero. Banks and credit card companies can borrow money at unheard of rates and loan it to you at a just a little more. This rate may be as low as 8 or 9 percent.

Loans at 8 or 9 percent does not seem like a deal until you consider most of your credit cards are probably around 18 to 24%. Getting it down to 8 or 9 percent will seem like a godsend because you can pay the balance down faster. Here is the trick. If you can consolidate 2 or 3 cards into one account at even 15% do it. Here’s why.

Once you pay off a couple of your credit cards, your credit bureau history will change. It will look like you have paid off 3 credit cards. Do not close the accounts you pay off. After a couple months, your credit bureau will update itself and who 3 paid off cards and your overall revolving credit balance as only 50% of the total credit limit. People who have rising credit balances look like they are going under. People with declining credit balances compared to their total lines of credit look like they are doing fine financially.

Now here is the really cool thing. You’ll start getting new credit card offers. Many of them will have a transfer balance at zero percent interest for several months. I got one last night that has zero interest for 15 months. Apply for the card and ask to transfer the balance from some of your other credit cards.

You have just lowered 2 or 3 of your accounts from 25% interest to 12-15% interest. Then you took one or two other accounts and reduced their interest rate from 25% to zero percent. Now more of your payment will go to cover the balance and you will start paying things off.

For more tips and debt consolidation advice, please click the link now.

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