consolidation reduce debt??

Jules · Joined: 08 Jan 2007 Posts: 1

How do I work out if consolidation will reduce the total amount I owe? Or is consolidation usually a gud option if ppl owe a lot? I owe money 2 lots of different places all wiv different rates u c, im finding it confusin workin it all out.

Help me…

Andrew

If you have a mortgage and your house is worth more than the mortgage, then it can be a good option to consolidate your debt by re-mortaging to pay off your debts. This will usually mean you pay less each month, but may mean you pay more over the life of the loan. A big mistake many make when they do this, however, is to build up their credit card debts, etc again. If you can resist this, consolidation may be for you.

If you don't have a property, then consolidation is more tricky - you'd usually do it through an unsecured loan and the difference in what you pay could be marginal: check it out though.

You may be able to make big inroads into your debt by using a technique known as snowballing. Pay the minimum on all your debts except the most expensive one - and pay back as much as possible on that single debt. Once you've dealt with that one, move on to the next debt and so on. Your debts can disappear months earlier than they would otherwise.

If you can move some or all of your debt onto another card using a 0% balance transfer then do. But, be aware that if you don't make payments on time your preferential rate will disappear and be replaced by one that may well be higher than that which you are paying now.

Hope this helps,

Good luck

Merry · Joined: 05 Sep 2008 Posts: 5

[quote="Jules"]How do I work out if consolidation will reduce the total amount I owe? Or is consolidation usually a gud option if ppl owe a lot? I owe money 2 lots of different places all wiv different rates u c, im finding it confusin workin it all out.

Help me…[/quote
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would be a good idea to classify your accounts. If you have several small payments that you owe, it would be better if you pay them off to keep up your credit rating.