Debit Consolidation

Debit Consolidation


Budgeting for your Debit Consolidation Program

Published November 13th, 2008 in Advice for Consolidating Debits | 1 Comment »

The willingness to change your lifestyle and spending habits is vital before getting a debit consolidation loan, but it’s not something you should fear. You have to understand that you can’t continue to live as you are anyway, so it either has to come to a controlled ending or crash and burn a little farther down the line. I’m going to move forward with this series of articles assuming that you’ve made the right choice, and are dedicated to living within your means.

Now that the switch is flipped and you’re no longer buying everything you see, you need to take a deep breath, sit down, and take stock of everything that you owe, what your minimum monthly payments are, and what your monthly bills add up to. This is important, because it gives you the minimum amount of income that you need to meet your minimum monthly payments and your essential services like utilities, rent, gas, and so on. It will also eventually tell you the size of the debit consolidation loan that you need. Some things, though, are not all that easy to budget for. Your utility bill fan fluctuate drastically from season to season, with your electric bill going down and you gas bill going up in the winter.

All I can say is, you need to take your best guess at it. Obviously budgeting for gas isn’t an exact science, as gas prices fluctuate wildly as can the number of miles that you drive in a week. But, if you really hold your feet to the fire, look at your past payments, and figure out a good average, you’ll be in good shape. Obviously your gas budget will tell you whether or not you can take a road trip down the coast or not this weekend and big things like that, but there needs to be some flexibility to meet higher than expected demand in different areas.

Debit Consolidation Loans

Published October 27th, 2008 in Debit Consolidation Programs | 1 Comment »

A large percentage of the calls that I get are people looking for advice on debit consolidation programs.  People seem to think that they’re some sort of silver bullet that will magically make their debit quickly disappear, and they’ll come out on the other side healthier and wealthier.

This couldn’t be further from the truth.  As a matter of fact, in many instances people who are not ready to drastically change their lifestyle come out in worse condition that when they entered the program.  Think about getting a big loan that pays off all the rest of your debit, then racking up the same amount of debit 9 months later.  Now you’re in the same position you were a year ago, except you have another big payment on a consolidation loan that you never should have gotten in the first place.

What I usually do is ask people to come into my office and sit down for a financial planning session.  Nothing formal, just a chat to find out what their situation is, and see if they’re a good candidate for a debit consolidation loan.  Things I’m looking for are a willingness to change, attachment to expensive personal property, lifestyle, and circumstances that lead to the debit problems in the first place.

People who have jumped from credit card to credit card, wracking up debit and moving on to the next one when the previous one is maxed out are not good candidates unless they’ve already shown actual progress towards changing their lifestyle.  That means living on a budget, cutting up their cards, selling expensive assets and so on.  If people haven’t already show this willingness, they’re more likely to just treat the consolidation loan as another source of credit and fail to pay that off as well.  The money that they save in monthly payments will just be transferred to another maxed out credit card’s minimum monthly payment, and the cycle will continue.