Almost every people have experience in Debts. We might ever borrowed money or something to our friends or family. OK, let’s start our discussion about Debt Consolidation. Debt Consolidation is a means of simplifying payments of debts. It is a method wherein you pay all your debts using one single loan. On the other hand, it may extend your repayment time. It would also mean an increase on your finance charges. Refinancing is one option to lower interest rates.

Advantages and Disadvantages of Debt Consolidation.

Everything has plus and minus points. As its plus points, it requires only one monthly payment rather than numerous. This simplifies bill paying. It assures also that the bill is paid on time. When it comes to interest, it may also have lower interests than other debts.

Then it’s minuses, reduction in the monthly payment (longer time for paying) may attempt you to take on more debt. What’s worse is that you may lose your home if you take out a mortgage to pay off unsecured debt.

A well-chosen consolidation plan is necessary so that it will not push you to a deeper pool of debts. There are certain means to get money for debt consolidation. Here are some of them:

• Borrow from family and friends.
It sounds easy to borrow from this group of people but not paying the said amount properly or just being on time will ruin the relationship.

• Borrow money from yourself
Money from your savings accounts, Certificate of Deposits (CDs), stocks, bonds, or retirement could be of use or consolidating debts. It just takes risks because this amount may serve as your emergency fund. You may need it ay time soon.

• Lie Insurance, Loan Account or Home-Equity Loan
Are also means of money for debt consolidation but they post disadvantages.

• Pawnshops
It can give money instantly but only 30-50% of the real price of an item.

Just remember, a consolidation loan is fine if and only if YOU are in the following condition :
- Have a high amount of debt;
- Have a very high interest rate on that debt; or
- Are considering borrowing more money at a high interest rate.

If you are not committed to repay the debt, you are tempted to use “freed up” money to have more debt or you are risky enough to lose your own car, debt consolidation is not a good idea in any side o the spectrum.
You have to think of some alternatives and not resort to consolidating debt.

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