This program will help you undo financial bondage.
Consolidating debt is taking out a single new loan to pay the debt from more than one previous loan. Do this only when the annual interest charge on the consolidating loan will be lower than the annual interest charge you are paying on the loans that you would consolidate and there are no other fees that make the overall charges higher. For example, you would use a new loan that has a 6% annual interest rate to pay off three loans that currently have 10%, 12%, and 15% annual interest rates.
This strategy allows you to more quickly eliminate debt by reducing the interest you pay to the lowest possible level and helps simplify your budget by replacing several different payments with one payment. For this to work at its best to get you out of debt and into financial freedom you must continue to make the same level of monthly payment and possibly more that you were making on all the loans that were consolidated. Also, you should resolve that you will refuse take on other consumer loans in the future. In addition, it’s best to close all charge accounts and cut up the cards, so you won't be tempted to use them again. Most of these accounts charge you annual interest at nearly twenty-five cents on each dollar.
When possible, consolidate higher interest debt into a fixed-rate low-interest consolidation loan that has no pre-payment penalties. These are normally closed-ended, which means the amount paid off each month is not re-usable. This helps you stop using debt as a go-to spending method in the future.
If you are considering using a new credit card with non-fixed interest rates as the consolidating loan, never consolidate any current loans that charge interest at a lower rate than the new credit card. Also, thoroughly read the credit card agreement to ensure the creditor will not at some point raise your interest rate to a level higher than what you currently pay. This is tricky because most won’t make such a promise except for a short-term (six-months to a year) and only for the money transferred during the promotional period. Any new charges will not get such a guarantee. You should know for sure that you have enough extra cash flow to pay the consolidated balance off within the promotional period or else you’re likely to eventually wind up with a higher interest rate than you had prior to consolidating.
If you have home equity, you could consider consolidating debts using a second mortgage or home equity loan. Normally, you could obtain a lower interest rate than that provided by other types of loans and you might be able to reduce the amount of income taxes you owe each year by itemizing the second mortgage / home equity loan interest charges on your federal tax return. However, be aware that failure to pay on this type of loan could result in the foreclosure of your home. So, faithful discipline and diligence sticking to a budget plan to get out of debt as soon as possible is necessary to avoid problems down the road.
It’s usually best to avoid consolidating debt and simply use great budgeting focus to eliminate your debts, when you can pay them off in a short time (1 to 2 years) without consolidating. No matter which road you choose, focus on increasing your income via a second job or profitable entrepreneurial endeavor that provides added cash flow to apply to debt elimination.
Deuteronomy 28:12, 15, 44,
Proverbs 22:7, Luke 16:8-9, Romans 13:8
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The book at the link below provides
principles and practical steps that help you use the Power To Get Wealth.
By 1992, we had $135,000 of debt and a negative $35,000 net worth. Financial
bondage and turmoil led me to seek principles and a process for employing good
stewardship. As a result, we became constructively debt-free in 1998, mortgage
free January 2004, millionaires in 2012, multi-millionaires shortly thereafter,
and retired in 2018 in my mid-fifties from public servant jobs while giving
abundantly to fund the gospel of our LORD Jesus Christ. The same power is
available to you!
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