del.icio.us

|

Digg

|

Reddit

|

StumbleUpon

Debt Consolidation and Refinancing Can Bring You Closer to Financial Independence

By Stanley Rubenti
Mortgage Credit Problems Columnist

If you have lingering debt that you can't seem to shake off, you're not alone. It is estimated that approximately 115 million Americans carry over credit card debt month after month. It is also estimated that 77 million Americans have unmanageable medical debt. And these staggering figures don't include car loans, utilities, tuition, and other financial burdens that prevent us from achieving true independence. If this scenario sounds all to familiar to you, it may be time to consider debt consolidation.

A Debt Consolidation Service Is an Excellent Option

Bills have a way of popping up faster than we can pay them off. And each one of these has a different due date and interest rate. Understandably, delinquencies and accumulating debt are fairly common occurrences for some Americans. But if you take out a debt consolidation loan, you can lump all of your financial liabilities into one convenient monthly statement with a relatively reasonable interest rate.

Debt Consolidation Can Also Improve Your Credit Rating

Not only can a debt consolidation loan decrease your overall financial burden, but it can also help you improve your credit rating since achieving financial responsibility is much more attainable. A Fair Isaacs & Co. (FICO) credit rating of 620 or lower can often make it difficult to purchase homes, cars, and secure other loans from creditors. But with debt consolidation, you can dramatically decrease the likelihood of delinquent payments since you only have one bill and one date to manage.

Debt Consolidation Is Not the Only Path toward Financial Independence

If you currently have sizable outstanding loans (mortgage, student loans, car loans, etc.), you might be able to refinance them and secure a lower interest rate.

Refinancing (like debt consolidation) can help you counteract the effects of compound interest. For example, if you have a $100,000 house with a current mortgage interest rate of 10%, and you switch that to an interest rate of 7%, you can save yourself almost $68,000 during the course of a 30 year mortgage. Imagine the security and satisfaction that $70,000 can bring you over three decades.

Whether you pursue debt consolidation or refinancing, it's important to make sure that you secure the lowest possible interest rate that you can. Credit card companies make untold millions off of Americans who simply don't understand how compound interest works against them. With proper planning and wise spending, you can prevent lenders from getting rich off of your hard work.

About the Author
A freelance writer, Stanley Rubenti currently lives in Bangkok where he writes columns for a variety of publications. Stanley holds a B.A. in History.

Other Recommended Debt Consolidation Articles

• Don't Let Bad Credit Lead to Mortgage and Debt Consolidation Scams
• Four Questions to Ask a Debt Consolidation Service
• Debt Consolidation HELOC