What is a Debt Consolidation Loan?

Debt consolidation loans are loans aimed in reducing your debts by consolidating it, which is replacing many payments each month into a single payment, making your money management easier. Knowing how to use these loans for debt consolidation is helpful in determining how to properly manage your money and free yourself from debts.

The advantages of debt consolidation loans are that it lowers the risk of you being late in paying your debts because it is already consolidated into one payment while paying off your debt in a shorter time. It will also have a good effect on your credit rating. But, on the other hand, since you consolidated your debts, your monthly bill will be much larger, so you have to be careful.

Financial institutions, especially the banks, offer various types of loans for debt consolidation. This is answer to the seemingly uncontrollable customers’ debts. The loans offered by the banks for debt consolidation includes several financial services such as personal loan, personal lines of credit and home equity loans.

Using home equity for debt consolidation is one way of paying off your debt. Home equity is the part of your home. Equity is built as the value of a home appreciates and as the principle in the mortgage is paid off. It is the difference between the mortgage and the value of a house and can be use for debt consolidation if you are living in your house. This is done through borrowing against your home equity.

Home equity can help you pay your creditors by debt consolidation. Through borrowing against your home equity, you can reduce your interest rates so that a major portion of your payment can go to your principal balances. There are two options in using your home equity for debt consolidation, the home equity line of credit and the home equity loan. These two options are secured by your property, and are called second mortgages. These options must be repaid over a period of 15 years, which is much shorter than the period set up to repay first mortgages.

In home equity line of credit, you will borrow a specified amount of money from a lender, usually the bank or other financial institutions. The lender will give the money up to the credit limit. It works like a credit card due to its revolving balance, in a sense that the given money can be acquired using debit and credit cards, as well as, check books. It is more flexible compared to a home equity loan. The interest rates of the home equity line of credit fluctuate and the payments depend on the rates.

Home equity loan, on the other hand, is type of a home equity wherein you get a second mortgage. It lets you borrow an amount of money with a fixed interest rate. This can be considered as a good option for debt consolidation because it works best when you need to, all at once, borrow an amount of money.

In using home equity for debt consolidation, banks have a formula in determining the available amount of your home equity to be used as a loan. Your debts can then be consolidated into one payment. However, it is important to settle your monthly payment so it will not lead to the lost of your collateral, which is your home. When you use it for debt consolidation, your home will be the guarantee or your collateral. If there comes a time when you cannot be able to repay the debt, the bank can sell your home, in which case you will be forced to vacate it.

Related links:
 Debt to Wealth
 Common Sense Debt Secrets
 Debt Buster Systems

What Is Your Financial Thermostat?

Before you can secure your financial success, you need to identify your financial thermostat - your current beliefs about money - because these beliefs might be holding you back. Often, these beliefs are ingrained in you since you were a child and you carry them into adulthood.

List down everything you've heard about money. It might be something like this:
Money doesn't grow on trees.
Money is the root of all evil.
Money doesn't buy happiness.
Making money is hard work.
Rich people become rich by stepping on other people.
...........

How many of these statement have influenced your attitude towards money? How have the beliefs influenced your behavior?

After you've identified your limiting beliefs, brainstorm for a list of new, positive beliefs to replace the negative ones. Your new beliefs might be:
Money allows me the help the needy.
I'm a money magnet. I attract money easily.
Money allows me to travel to places I've always dreamed of.
...........

One of the important success habits is to pay yourself first. Make sure you save at least 10% of your income. This sounds simple, but it's surprising how many people find that it's the hardest thing to do. Many say they'll start saving when they have extra money, but that day never comes. You can make paying yourself first easy by having a standing order to transfer money to a saving account. If you never see the money, you won't miss it.

Make a list of all your debts and work out a plan to pay them as quickly as you can. If you need help doing this, get the help. After you've paid your debt and you have a small amount of saving, you can then think of investing.

That is a story for another day.

The Power of Intention

"Doing isn't difficult. Deciding is."
- Foster Hibbard

What is the one thing that you want in life? A loving spouse? A mansion? A sport car? A promotion? Go to grad school?

Regardless of what you want, the critical step is deciding. Decide what you want. If you do not decide, you won't get it. It's as simple as that.

Once you've decided, take steps to move yourself towards your desire. It doesn't have to be something earth-shattering. It could be something as simple as putting aside $10 a month to buy that fancy dress you've been eying. Each day, take small baby steps to get you there.

I know that deciding and taking small steps work because it has worked for me. If it works for me, it would also work for you.

Since I decided I want to be financially free and start taking baby steps, a series of events have occurred that take me closer to my goal. A seminar invitation, a new contact, new acquaintances, new opportunities. When I look back on what has happened in the past 6 months, I could not help but feel amazed by how things seem to fall into place.

When you read books on how to be successful, all of them advice you to get into the company of like-minded people. Surround yourself with successful people. When you do so, you cannot help but be influenced by their success and that will help propel you forward. The next most common advice is to find a mentor. A mentor is vital in securing your success because s/he had done it and can guide you, and reduces the chances of you making unnecessary mistakes.

I asked myself for months, how and where I can find like-minded and successful people. An opportunity presents itself last May. I heard this really loud voice telling me, "Go join them. Go for it. If you don't do this you'll regret it for the rest of your life." I followed that voice and found myself in the company of like-minded people and some very successful ones too! This is the power of intention at work!

My next concern was finding a mentor who can guide me. Last month, another opportunity was presented and I decided to grab it. I am now working under the guidance of a success coach. This is my second week in the program. What an awesome 2 weeks it have been.

If you've ever tried to enroll yourself in a coaching/mentoring program you'd know how costly it can be. I can barely afford it myself, but I decided to jump in anyway because I know that if I can go through this and achieve my goal within the next year, the reward I'll receive will far exceed the price I'm paying now.

I'm going to let you know what I'm doing in this coaching program. So if you can't afford such programs, pay attention, and I'll share what I learn with you.