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Financial Planning

     Consolidating debt can be a fantastic strategy in your financial planning IF, IF, IF done properly.

     Consolidating debt is a lot like what it sounds like. You take another debt or a group of debts and roll them into one. The goal is to reduce interest costs, reduce payments, reduce cash outflow and spend less money.

     Consolidating debt is either a great financial tool or a dangerous trap, depending on how you use it.

     Once you consolidate debt and meet the goal of lowering payments and costs, the deciding factor is what you do from there.

     If you use your payment savings to accelerate payments of other debt or to make long-term investments, then you are gaining. If you consolidate and make no changes in your life style, you will still be going backward, but at a slower rate. Then it is still a spiral downward.

     Some people will gain financial independence much more quickly with this tool. Some people will get rid of other debt, rebuild more debt and eventually can't consolidate and then have nothing.

Consolidate Debt as a Financial Strategy

What to Consider Before Consolidating Debt

     What are the loan costs?
     What are the length of terms? Locked in rates, balloon notes?
     What is the interest rate?
     What is both the monthly and long-term savings?
     What are you going to do with your savings?
     What are you going to do to avoid returning to having to make this decision again in the future?

Make sure to check out our loan comparison cost calculator for help in deciding if an equity loan may be right for you.
Loan Comparison Calculator
This calculator will calculate the monthly payment and interest costs for up to four loans -- all on one screen -- for comparison purposes.

To calculate the payment amount and the total interest of any fixed term loan, simply fill in the 3 left-hand cells of the first row and then click on "Compute." Use the other three rows to see what effects are produced by changing any one of the loan's original variables.

Principal Interest
# of
Compute Monthly

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