Think about it this way. If a small pond had 10 fish but a 50% growth rate each year, then the first year it would only grow by 5 fish. But after 10 years there would be 576 fish! Now what if there was a bigger pond with 50 fish, but it only grew at a rate of 25%? After the first year, it would add 12.5 fish, but after 10 years, there would be 466 total fish. The bigger pond produced more fish in the first year, but the small pond grew faster.
If you want to opt for a debt consolidation program, make sure you have the income to cover for the new payment scheme. If your finances cannot handle the current outstanding balance of your debts, you need to work on a debt settlement program. This form of debt relief option will aim to lower your outstanding debts to come up with a lower monthly payment. The goal is to have a percentage of your debts forgiven. This program is only ideal for people with real financial difficulties.
Our researchers found the median debt per American household to be $2,300, while the average debt stands at $5,700. Combined data from the U.S. Census Bureau and the Federal Reserve allowed us to dive deeper into credit card debt in the United States, and look beyond the face value of those two figures. Below you'll find some of the most prominent trends that emerged from the available data.

Worsening credit. Whether you use an intermediary or not, your credit score can take a serious hit when you agree to a debt settlement arrangement. Even though you've repaid the negotiated amount, the fact that you settled generally appears directly on your credit report even after the credit card account has been closed. And it stays there, dragging down your score, for up to seven years.


For recipients with multiple federal student loans or those individuals with several credit cards or other loans, consolidation may be another option. Loan consolidation combines the separate debts into one loan with a fixed interest rate and a single monthly payment. Borrowers may be given a more extended repayment period with a reduced number of monthly payments.
First of all, I would like to say that all customer service reps have been exceedingly kind to me. However, the follow-thru is not so good. THREE times I have been promised a complete report of ALL transactions since the day I joined FDR and I still have not received it. Also I had one more payment left to settle a debt and instead of my next deposit going towards that, it was left open and my deposits started going to a new debt and the prior one is back in negotiation, meaning I have to pay settlement fees all over again when it finally does get settled. I just feel like FDR is swindling me. Sorry.

Finally, it’s a mistake to close any credit cards especially those you’ve had for many years. In addition to not being able to use those cards anymore it will have a seriously negative effect on your credit score. There are two reasons for this. The first is that 30% of your credit score is based on your credit utilization or how much credit you’ve used versus the total amount you have available or your total limits. This is sometimes called the debt-to-credit ratio. Let’s suppose that you had total credit available of $10,000 and had used up $2000 of it. You would have a credit utilization of 20%, which would be very good. But if you were to close two of those credit cards so that your total credit limit dropped to $4000 you would now have a debt-to- credit ratio of 50% and this would have a very bad effect on your credit score.
This is a very interesting scenario and you’ve raised some good points and questions. If I were you, I would be very concerned about the $3,000 loan. I would probably want to pay that off as soon as possible. Sure, you may lose a hint of efficiency in the process, but you’ll be saving against A LOT of risk. You absolutely do not want that to go up to 29% if you can help it–it’s not going to have safety nets like your student loans (if they are federal) and you never know what might come up unexpectedly. Once that’s out of the way, you could return to the student loans as normal, using the ladder method.
Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates ("APR") may vary based upon LendingPoint's proprietary scoring and underwriting system's review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint's final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customer are paid on a biweekly schedule and thus this may better align the loan payment dates with our customer's actual income receipt schedule. We also offer monthly and bi-monthly pay schedules.

In today's world, it's hard to get by without a credit card! Whether you want to rent a car, shop online, or go out to eat, chances are good that it's more convenient with plastic. And, with so many different cards to choose from, there's a perfect card for everyone: no credit history, bad credit history, frugal consumers who don't want annual fees, and rewards program lovers alike can all get a credit card to fit their spending habits.
As a general rule of thumb, secured loans usually come first on your list for payment. If you own a home, your mortgages or home equity line of credit are often at the top of your list in order to avoid foreclosure and the loss of your home. Similarly, if you don’t own a home but have a car loan, this is usually your top priority. Being in debt is already hard enough, and losing your car would only make matters worse by making it hard for you to get to work. Not to mention with the depreciation in value of cars on the market you could end up having to pay the difference between your original sale price and the amount obtained at auction.
First of all, I would like to say that all customer service reps have been exceedingly kind to me. However, the follow-thru is not so good. THREE times I have been promised a complete report of ALL transactions since the day I joined FDR and I still have not received it. Also I had one more payment left to settle a debt and instead of my next deposit going towards that, it was left open and my deposits started going to a new debt and the prior one is back in negotiation, meaning I have to pay settlement fees all over again when it finally does get settled. I just feel like FDR is swindling me. Sorry.
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Credit counseling. Most businesses in the debt-relief industry offer free credit counseling services. Certified credit counselors help consumers build an affordable budget and learn how to live with it. Counselors teach them the debt-relief options available and offer advice on which one best suits their situation. This is an overlooked aspect of many debt-relief services. It increases the financial literacy of consumers by leaps and bounds.
Many 401(k) plans will let you borrow against your retirement savings at relatively low interest, and you pay that interest to yourself. But if you quit your job or get fired, the entire 401(k) loan becomes due immediately, and there’s a 10 percent penalty added if you fail to repay and you’re under age 59.5. It’s also worth considering that you’ll lose out on anything your investments could have earned if you left them in the 401(k).

Financial Peace University is the proven plan that will get you out of the cycle of living paycheck to paycheck. Financial Peace is the membership that will teach you how to pay off debt, budget, save big, and give like no one else. And right now, you can try it free with a 14-day trial!  You’ll get all nine video lessons that break down the proven plan—the 7 Baby Steps, plus other awesome tools and resources to help you get your money on the right track right now!

3. Simplifying your finances. It can be easier to pay a single bill each month rather than trying to keep track of multiple bills and due dates. A single payment can help you with not missing payments, and not having late fees costing you more. Late fees can also damage your credit score, so having a one-and-done payment can help keep you on track.
U.S. debt settlement differs slightly. There are several indicators that few consumers actually have their debt eliminated by full and final settlement. A survey of U.S. debt settlement companies found that 34.4% of enrollees had 75 percent or more of their debt settled within three years.[7] Data released by the Colorado Attorney General showed that only 11.35 percent of consumers who had enrolled more than three years earlier had all of their debt settled.[8] And when asked to show that most of their customers are better off after debt settlement, industry leaders said that would be an "unrealistic measure." [9]
Interest rates on loans to consumers, whether mortgages or credit cards are most commonly determined with reference to a credit score. Calculated by private credit rating agencies or centralized credit bureaus based on factors such as prior defaults, payment history, and available credit, individuals with higher credit scores have access to lower APRs than those with lower scores.[10]
This strategy doesn't apply if you own a term life insurance policy. It only works for those with whole life policies that have built up cash value. It's also important to note that even if you do have beneficiaries, you may be able to tap into part of the cash value of your whole life policy, getting cash for debt reduction and still leaving some life insurance proceeds to your loved ones.
Yes it does! I tried this about 20 yrs. ago! I consolidated my debts into one amount! I also had my interest rates reduced by the loan company. I discovered that any money that was shaved off my debt in any way whether by lower interest rates or by taking settlements were considered charge-offs and demolished your credit rating. It took me over 30 yrs. to regain any credit worthiness at all!
Know that with any type of debt consolidation loan, you're not getting rid of your debt. Instead, you're simply shuffling it around so that it becomes easier to pay. You'll feel like you have less debt and may be tempted to borrow more. Practice discipline and avoid borrowing until after your debt consolidation loan has been completely repaid. Even then, it's important that use good judgment in taking on additional debt.
It’s hard to know the answer because it’s impossible to know your exact situation. A credit score factors in both non-revolving (car loans or mortgages, for example) and revolving (usually credit cards) credit. Diversity of credit has an effect, as do on-time payments and the amount of credit you access versus your credit limit (under 10% is best of all, but under 30% is considered acceptable).
You may have heard that some creditors are willing to settle your debt for pennies on the dollar. In reality, credit card debt forgiveness is rare and tricky, and can be very costly. You have to first be in serious arrears. Then you have to convince your creditors that you don’t have the means to repay your debt and your situation isn’t likely to change. If you manage to work out a debt settlement agreement, the creditor is all but guaranteed to report your forgiven debt to the IRS. The forgiven debt is considered taxable income.
Unsecured loans, on the other hand, are not backed by assets and can be more difficult to obtain. They also tend to have higher interest rates and lower qualifying amounts. With either type of loan, interest rates are still typically lower than the rates charged on credit cards. And in most cases, the rates are fixed, so they do not vary over the repayment period.
What to watch out for: OneMain charges an origination fee, which varies by state, and rolls it into the monthly payments. Late fees also vary by state. OneMain Financial does not operate in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island and Vermont. Additionally, borrowers in Florida, Iowa, Maine, Mississippi, North Carolina, Texas and West Virginia have unsecured loan limits of $7,000 to $14,000.
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