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Personal Finance From a Biblical Perspective

Why A Consolidation Loan May Be Worth Considering

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I know that many of you may think I’ve gone crazy with the title of this article – especially since I am trying to pay off debt myself – but I can assure you that I have not.

With interests rates being as low as they are right now, this may be a perfect opportunity to take out a loan in order to refinance debt or start up a business.

Don’t get me wrong, I still despise being in debt bondage, and I would still advise all of my clients, family, and friends to avoid debt whenever possible; but I also understand that taking out a loan isn’t always the worst option.

Here are a couple of situations for which getting consolidation loans might be the answer.

High Interest Credit Card Debt

Some people get into credit card debt because they decided to live above their means. For others, it may have been due to a few acts of desperation. Some may have even tried to take advantage of credit card benefits, and for some reason, were not able to pay off their debt.

No matter what the reason, if you are stuck with high-interest credit cards, it’s time to take action. First, call your bank(s) and try to negotiate a lower rate. If that doesn’t work, see if you have a card with a zero balance and a balance transfer offer. If your savings are higher than the transfer fee, do it!

If none of these options work, it may be best to take out a loan – be sure to take advantage of a personal loans comparison first from sites like http://www.comparethemarket.com/loans/ – and consolidate your credit card debt.

Student Loans

There are a growing number of people who are financing their higher education with the help of student loans. Unfortunately, many of those former students are then put into a difficult financial situation because of their high monthly student loan repayments.

Depending on whether you took out subsidized versus unsubsidized Stafford Loans (or some other instrument), you may end up owing a lot more than you realize once you’re out of the grace period.

Sometimes, the only option in these cases is to secure another loan, which will help you to lower your interest rate and/or extend the amount of time that you are given to pay back the loan – lowering your payments in the process.

Of course, your goal should always be to pay back any debt as quickly as possible, so don’t use your lower payments and a license to go wild with your spending!

Consolidation Loans For Your Car Note

Most people only think about refinancing their mortgage when overall interest rates in the economy drop. However, you can still save yourself thousands of dollars if you can get a new loan for your vehicle.

Don’t forget to compare any fees that you might have to pay with the amount of money you stand to save by refinancing.

The same exact things can be said about refinancing your mortgage – besides, people write about that so often that it gets boring! 😉

photo by Omar Omar

Reader Questions

  1. Have you ever had to take out consolidation loans for one or more of the reasons listed above?
  2. Do you think it’s a bad idea to try to fix a debt problem with more debt?

5 Ways To Save On Your Student Loan Repayments

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5 Ways To Save On Your Student Loan Repayments

With the end of another semester looming on the horizon, and the thought of all those student loans looming over your head like a bad hangover, many students are left wondering how to pay for the past few years of higher education without breaking the bank, or stretching the payments out for the next 10 years of their lives.

Here at MyCreditGroup, we understand the stress student loan repayments can have on new college grads, so we put together 5 tips for helping you wipe them out in a timely fashion.  Pay attention – there might be a quiz after:

Don’t Put Off Your Student Loan Repayments

Okay, that’s not the most groundbreaking piece of advice, but that doesn’t make it any less true.  As soon as you’re able, you’ll want to start making efforts to pay your loans off as quickly as you can so you won’t have to worry about it again.

This is easier to do if you’re already working.  Commit as much of your income as you can afford to paying your loans down.  Any other extra cash you may see, from extra cash from mom and dad to birthday cards from grandma, put them towards your student loans.  Yeah, the money could be spent on worthwhile ventures like excess partying, but using it to you’ll be surprised at how manageable your loans will start to seem.

Take Up A Part-Time Job (Or Two)

If you don’t already have a job, even a part-time one, consider looking for a gig after classes or on weekends to help you start paying your student loans.  Anything from a retail job or freelance work, to tutoring or even babysitting (hey, it’s money…) will not only help you bring in some extra cash for yourself and your bills, but it’ll help you build up an employment history as well, and give you an advantage over unemployed students at graduation!

Join The Public Service.

If you borrowed federal funds to help pay for your education, the Department of Education’s Public Service Loan Forgiveness program may be able to help you out.  If you’d rather join the Peace Corps than become another office drone, or go into any government agency for work, your loan may be forgiven after 10 years of service and on-time payments.

If you’ve got a lot of student debt that needs to be paid, and you’ve always wanted to see the world, this could be a great way to take care of two birds with one stone.

Tack It Onto Your Income

Another option for those with federally-funded student loans, and one that doesn’t require 10 years of service, is to check if you qualify for Income-Based Repayment, a program that caps your loan payments based on your income.  Typically, these amount to 10% of your income, and will forgive any remaining debt after 25 years of payments.

Stay On Target

Finally, no matter what you decide to do to try and pay off your student loan debts as quickly as you can, remember to always at least pay the minimum balance on time every month.  Debt is an easy thing to slip into, and student loans are no different.  Unless you want to spend a good chunk of your adult life paying for college, keep paying your bills on time.

This is a guest post from Marc Chase, President of Product Development for My Credit Group, a website offering credit repair services and education.

photo by renjith krishnan

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