Most people who are dealing with debt have heard of debt consolidation, but they may not know how it works. This type of debt payoff plan isn’t a quick solution to pay off debt, and it might take you just as long to get rid of all your debt.

Debt consolidation uses one huge loan to pay off all your smaller loans, which can lower both your interest rate and your monthly payments.

With this approach, you make one payment each month instead of sending several different payments at different times each month, like you do with your current debts. Instead of all these loans with their separate interest payments and lengths, you can end up with one loan from a single company. So, instead of having many smaller debts, you have one big debt.

Here are a few of the advantages of this approach:
You’ll probably get a lower overall interest rate. You only have to make one payment each month instead of several payments to different companies. You only have to deal with one creditor if you run into some financial trouble. You’ll simplify your budget and reduce the number of cheques you have to write each month. Here are a few of the disadvantages of this approach:
You may end up paying more interest over time because the lower monthly payment will take longer to pay off. Saving money each month could end up paying more money over time. You could end up with a variable interest rate, which could rise over time. If this happens, your monthly payments will go up, and you may get less manageable payments in a few months or years. Using credit cards to consolidate debt

Credit cards can actually be consolidated using other credit cards instead of a separate loan. Instead of having debt on several different cards, you can combine all your separate debts onto one card.

If you hear about a ‘balance transfer’, this is what the credit card companies will be talking about. Basically, you can take the balance from several different credit cards and transfer them to a single card. You probably get ‘balance transfer’ offers once in a while from competing credit card companies if you already have one or more cards.

Only having to make one credit card payment each month can streamline your budget. You’ll be able to check out just how much credit card debt you have more easily. Plus, if you do this right, you’ll also get a better interest rate.

If you’re considering a balance transfer, be sure to know what you’re getting by reading the small print. Usually these offers will come with a very low introductory interest rate, which is probably a lot lower than what you’re paying on cards you’ve had for a while. Usually this interest rate will only hold for a certain number of months, and after that, the credit card company can raise the rate as much as they please.

If you can pay off the balances that you transfer before the rates go up, then a balance transfer is a great way to consolidate your credit card debt. However, don’t keep switching the debt around. Most banks will penalize you for this, and it can also harm your credit rating.

Consumer debt is a real serious threat the American family. Last year credit card companies earned 150 Billion dollars from the American consumer. Unfortunately $90,000,000,000.00 came from penalties and late fees. It is obvious that the credit card companies and financial institutions have replaced the local loan shark. The result of all this debt is the destruction of the family. The mismanagement of money and in particular credit card debt is the number one cause of divorce and broken families. Domestic abuse and violence is a direct result of too much credit card debt.

Many families are seeking was to manage their debt load. One of the most common sought after solutions is a credit card debt consolidation loan. Many financial institutions and debt counselors recommend a debt consolidation loan. However what many people fail to realize is that there are debt consolidation loan consequences. There are two types of debt consolidation loan on the market today. These included secured and unsecured loans.

A secured loan is tied to some form of equity and in most cases it will be your home. A second mortgage will in many cases lower your interest rate on your debt below what you are paying on your credit cards especially if you have missed a payment. It is not uncommon for a credit card company to raise the interest rate on your account to more than 30 percent after just one missed payment. Basically you have taken the equity from your home to pay off your credit card debt. Studies have shown that unless you cut up all your credit cards and close all your consumer credit accounts you will again end up in financial crisis within 3 years.

Unsecured debt consolidation loan consequences are greater than most secured loans. Interest rates are higher and many have the same loan shark triggers that cause your interest rates and payments to sky rocket if you miss or are late on a payment. Many credit card counseling services will market these loans to their customers. One of the reason they do so is that they sometimes make money one each loan they refer to a financial institution. This is clearly a conflict of interest. If your debt counselor recommends or offers an unsecured consolidation loan you should ask them if the profit from the loan.

Again studies have shown that more than 76 percent of the people who use debt consolidation loans to pay down their credit card and consumer debt end up back in serious debt within 3 years. Unless you change your spending behavior you are guaranteed to end up in financial crisis again. These serious debt consolidation loan consequences will trap you and your family. All of which places you further in debt and increases the damage and stress to the family.

To avoid these debt consolidation loan consequences you will need to work with a credit card counselor that will help you pay down your debt using sound financial principles. That means cutting up all your credit cards and living on a cash basis. If you follow your debt elimination plan you can be debt free in a relatively short time. The average family is able to pay off all its consumer debt in 3 years or less. In addition they will have the ability to invest in the family’s future. Being disciplined and following a debt elimination plan will protect you from all of the debt consolidation loan consequences and help you become debt free.

There’s much debate around the healthcare system reform proposed by President Barack Obama. And while there are many people who protest against it, and those who support it, it is important to know what it is all about in the first place. Here is a short overview of the reform, which is comprised of three essential parts:

1. Assure all American citizens with access to comprehensive and affordable health coverage

The main features of this part are:

• New Public National Health Plan, which will be very close to the current health coverage provided to federal employees. The main difference is that the new plans will be available to all US citizens for a reasonable price no matter of their financial situation. Deductibles and co-payments will be reduced to minimum, while low-income persons will have the possibility to use additional subsidies.
• National Health Insurance Exchange, which will allow US citizens to look for private health plans. It will set regulations on private insurance providers in order to make sure that private plans are not too different form public ones.
• New business mandate requiring national enterprises to pay for the Public National Health Plan.
• Individual mandate aimed specifically at children.
• More support provided to existing programs like Medicaid and SCHIP.

2. Improve the quality of healthcare services and lower their costs

This initiative presumes federal financial assistance for improving the quality of the services and lowering the costs, with additional assistance to enterprises that cover high-risk employees.

To President’s belief the following actions may also contribute to lowering cost and improving services:

• Special disease management programs for improving chronic care.
• Improving transparency in what concerns quality and costs of healthcare offered by providers.
• Lowering the rates of medical errors.
• Introducing financial incentives to stimulate substantial improvements.
• Providing support for researching new and alternative healthcare technologies.
• Eliminating ethnic disparities in access and quality of healthcare services.
• Popularizing health IT.
• Stronger regulation of insurance and drug markets in order to lower medication costs and allow cheap health insurance.
• Preventing Medicare private plan participants from overpaying.

3. Wellness and healthy lifestyle promotion

This initiative is to be supported through the following actions:

• Special wellness programs at working places.
• Eliminating child obesity with school activities.
• Better education for present and future healthcare workers.
• Promotion of healthy lifestyle in communities.

Saving possibilities with the new initiatives

President Obama estimates that in average a typical American family will be able to save about $2,500 on an early basis after the plan will be implemented. These are the possible sources for such savings:

• Health IT introduction and implementation.
• Improved quality of services.
• Limitations on health insurance provider profits.
• Federal funding of catastrophic coverage that will lead to cheap health insurance.
• Universal coverage availability.

As you can see the Plan requires significant federal funding and that is one of the major points of those who are against it. Other arguments include direct implication to health insurance market, which of course is not quite welcome by the insurance companies. But is the idea of cheap health insurance for everyone that bad?

A debt consolidation loan might be just what you need if you are over extended and can’t seem to make ends meet. Nowadays more individuals are learning how to live within financial boundaries that they have never had to before. Irresponsible consumers and lenders have allowed themselves to be put in tough financial situations.

Most Americans are finding themselves with more month at the end of their paycheck than paycheck at the end of their month. There is no money left over. And even scarier, some are trying to maintain a dangerous balance of paying one credit card with another or sending in payments at the last possible moment, before a late charge is assessed. A debt consolidation loan is a way to get your finances back on track.

No judgment or condemnation is intended here. The truth of the matter is that most consumers know they are in a rough situation. They don’t need someone to point out their mistakes and remind them of their past. Consumers need someone to help them get their finances back on the right track. A debt consolidation loan is one option for overextended Americans to consider.

Getting a debt consolidation loan is a way of accessing a pot of funds to pay off overdue credit cards and other debt. People use this as a way to reduce monthly payments to a manageable amount that is only one payment per month, rather than having to juggle five or ten companies. Most major financial institutions offer a debt consolidation loan that you can apply for. These entities include banks, credit unions, and finance companies.

Do not use a payday loan company as a source of debt consolidation! While they might advertise themselves as part of the group offering a debt consolidation loan option, this is only a marketing ploy.

If you are thinking about applying for a debt consolidation loan, you should know the types if loans available and terms to look for. You cannot rely on the loan officer to provide you with the best option for your situation. They will be able to help you with the specifics though.

Typically, there are two types of loans that you can apply for:

1. Unsecured Loan

More commonly referred to as a personal loan or signature loan, this type of debt consolidation loan is unsecured because it has no collateral attached to it. Most financial institutions approve these loans only for people with outstanding credit and a low debt to income ratio. So if you are already behind on your monthly payments, chances are your credit score has already taken a substantial hit.

Also, if you are applying for a debt consolidation loan because you can’t make ends meet, chances are your debt to income ratio is already beyond the approval range. In other words, they will not just give you money. Banks want to be sure you are going to be able to pay them back. And they look at the numbers on paper. Gone are the days when your word was good enough to get a loan.

2. Secured Loan

It might be easier for you to get a secured loan to pay off your outstanding debt. A secured loan uses your house or some other type of valuable property as collateral. Banks use collateral as a way to encourage you to repay your debt to them. Also if you fall behind in repaying your debt consolidation loan, they reserve the right to take possession of said collateral and sell it as a means of repaying your debt.

The common terms used for this kind of debt consolidation loan are home equity loan, second mortgage, and cash-out refinance. All of these use your home as collateral and allow you to pay off you overdue bills. While you may be able to get a lower payment and interest rate, over time you could end up paying more if it takes you 15 to 30 years to pay off the debt consolidation loan. One benefit of this type of loan is that all the interest is tax deductible. You simply need to weigh your options.

Should you apply for a debt consolidation loan?

Ultimately the decision of whether or not to apply for a debt consolidation loan is yours. But you should consider if you are really in a desperate enough situation. A trained debt counselor can help you discuss you options. Maybe all you need is to negotiate with your credit card companies for a lower interest rate and repayment plan.

There is no denying that you probably need to take some type of debt consolidation action if you can’t make ends meet. But do it cautiously and don’t fall prey to debt consolidation scams. Use a reputable source that is approved by the national foundation for credit counseling to help to figure out the best debt consolidation loan option.

Many people suffering from deep debt obligations often look towards debt consolidation as the answer to their problems. Sometimes the debt is so painful, they don’t always look at both the pros and cons of this debt solution though, so we’ll take a brief look here.

First though, what is debt consolidation? Simply put, it’s the process of combining all your debts into one. If you have ten debts of $10,000 each, then you have a total debt of $100,000. Some of those debts however, might be generating an additional 10% interest, while others are generating 15%-20% interest. In other words: Some of your debt is more expensive than others.

This is where debt consolidation comes into play. In theory, you’d take out a loan for $100,000 at a reasonable – or hopefully low – interest rate. Then you’d use those funds to pay off all ten of the smaller debts. This leaves you with just one payment to make each month, and one interest rate to manage.

Consolidating debt can be done with debt consolidation loans, by transferring your debt to zero or low interest credit cards, and by taking out a home equity loan.

Using the equity of your home to pay off debts can be risky, because if you default on the new loan, you could lose your home.

Likewise, using zero interest credit cards could also be problematic in the future, because these offers are usually designed to lure you in. The zero interest doesn’t last.

Debt consolidation loans might be helpful, but be aware that when you have debt problems to begin with, you might not qualify for low enough interest rates. So if you choose to go this route, be sure to do all the math: Figure out whether the consolidation loan actually will reduce your overall payments – including the total interest you’ll be paying for the life of your loan.

Some credit and debt counselors feel debt consolidation of any kind is a bad move to make though. In fact, it’s estimated that 70% of americans who take out some sort of loan to consolidate their debt end up with the same or worse debt problems within two years.

A better, more long-term solution might be to consider using a debt counselor. Professional counselors negotiate with your creditors to lower your payments or interest rates, while at the same time coaching you to manage debt more effectively. The unfortunate side effect of using counselors though? Your credit report will take a hit because you’re not technically paying your bills as originally agreed.

So there you have a general overview of debt consolidation, the common solutions and options, along with pros and cons of each. Be sure to research all your options completely before making a decision of course, because you don’t want to make your debt problems worse in the long run.