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The Art Of Debt Consolidation: Strategies For Financial Freedom

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  • 7 min read

Debt consolidation is a powerful tool in your financial freedom arsenal. It allows you to combine multiple low-balance credit cards into one card that reduces the amount of credit you need to have in order to be fully debt free.

Consolidation cards can have a hard time getting you out of debt however, due to the fact that your total balance on each card must be higher than what is minimum on the new card in order for it to offer rewards.

If you want rewards on the new card, you must have at least a little extra on all of your previous cards to make up for the rewards lost when they are combined onto one card. This can be difficult if you do not have much extra money lying around.

In order for your new Card to offer rewards and receive benefits from combining with any other Card, they must both have a minimal balance requirement and each player must approve their account with the respective company in order for them to join forces and receive rewards.

Evaluate your options for debt consolidation

Before choosing a plan for debt consolidation, evaluate your options. There are many ways to manage your debt and find the best solution for you.

Most of these ways to handle your debt are legal. Using debt consolidation, bank loans, etc., as the only solution to your debt is not the best one.

It is important to look into different strategies that can help you reduce your total debt, including credit card reform proposals such as those proposed by Obama and Congress.

It is also important to keep in mind that your total score on Your Credit Report does not mean nothing else will be affected. As credit reports are a valuable source of information, don’t let the chance of new cards and accounts being opened or closed due to my current account being included in my composite report make or break you.

There are many ways to keep adding debts onto Your Credit Report without increasing your chances at paying them off completely.

Choose the right provider for your debt consolidation plan

When choosing a debt consolidation plan, you should research the different providers to see if they are good for your planophe

They may use high interest credit card reward programs to recruit new members into their systemophe

Some of them even monitor your account for excessive charges to maintain the quality of their serviceophe
If a credit card rewards program has problems with fraud or abuse, it can shut down its rewards program entirely. If you are charged fees that exceed your rewards points, you will be charged more due to management decisions made by the credit card company.

Choose a provider that is good for your personal situation ish depends on whether you want to sell or consolidate your debtvans depending on what steps you need to take towards paying off your debtvendeedependent.

Consider a debt management plan

A debt management plan(also called a credit counseling program or debt management program) is a useful tool for working through financial problems. While participating in a debt management plan doesn’t immediately free you from the effects of your own debts, it can be helpful.

Most programs will help you negotiate your debts to various levels, and may also refer you to a credit counselor if you need one. A professional can help you understand and handle your finances better than you can yourself.

While at first it may feel difficult to comply with all the rules of the program, in the long run it could pay off.

Choose a complete payment plan

When you have credit card debt, it is best to find a complete payment plan. A complete payment plan means you will make a minimum amount of payments on the credit card balance, and then you will start making smaller amounts per month to pay off the rest of the debt.

This is called a full balance reduction plan in credit cards. You can choose any kind of full balance reduction plan, but usually only one with your new credit card as it is now has to be topped off annually to add new debt.

The more complicated the full balance reduction plan the better. There are many ways to choose a full relief payment plan. These are named after famous people who created them to help people get out of debt.

They are Payment U-Turn, Complete & Confrontation, and Resolve & Rebuild.

Know the risks of debt consolidation

Consolidation debt is high risk business. There are many companies that offer debt consolidation services and charge high fees. Technically, these companies would only beallowed to consolidate unsecured loan obligations into a combined loan of equal amount, however, in practice this is not always the case.

As the loans are usually of different sizes, there is a risk that one will be overcharged or undercharged on the combined loan. Since the debts are usually from different sources, there is another risk that you will be victims of repossession should you fail to make your payments.

Consider looking into alternatives such as credit card debt resolution programs or non-consolidation methods such as re-payments or hiving off your existing credit cards.

Maintain the plan once established

It is important to remain consistent when working with a debt consolidation plan. You will be able veterans of the system, who have been helping people with their debts for years before the plan can help you.

Consolidation plans vary in how they handle your credit card debt. Some handle your debt as I mention above, as unsecured personal credit cards. However, some reconfigure your personal credit cards to include all of your debts, minus your normal rewards.

If you have a high reward credit card, look for ways to cut back or stop using the card. You will find it easier to stay on track with the plan if you take into account these changes in advance.

When it comes to paying off the debt, staying focused is also important. If you are making progress, keep up the effort and do not give out! Heading out of range can cause panic and drop off in productivity which needs to be kept in mind as well as taking advantage of these plans is only fair.

Use a family member or friend as a partner for repayment

A debt consolidation plan can help you save money by helping you to repay debt in unison. Using a family member or friend as a partner on your plan can help you save money in both time and effort.

Many credit cards offer limited-time offers where you can combine your cards to achieve a greater balance reduction, cardmember rewards, and/or features. Most of these features are buried under multiple cards so that you would have to pay for each individually, but with the cooperation of both parties, they can achieve a greater payoff.

Look into combining your cards on certain accounts that charge similar things like monthly bills or shipping fees, where one card pays off the bill while the other receives rewards.

Combine with bankruptcy filing

In the right situation, debt consolidation can be a great way to begin financial freedom. After you have made changes to your budget and payments, you can begin shopping at stores and starting pay raises.

Most of the time, when people join a credit card they don’t know how long they will keep it. Many times it is just for a year and then they trade it in for another credit card.

When you combine that with debt consolidation, you are able to start paying off your new credit card. You will still be on the lookout for shops and shoving your new credit card next to your old one so that you can start shopping and paying off on it.

This is a good way to start paying off debt because both parties get benefits.Continue reading this article to learn more about combined cards.

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