We all want to get debt free but it is not easy as we have limited and fixed monthly income.  If you are reeling under multiple debts, you need to take some immediate steps to cure your financial health. Debt consolidation is a good way to get rid of your debts.  However, there are many misunderstandings about debt consolidation.  Here are few things you should know about debt consolidation.

What is Debt Consolidation?

Debt consolidation refers to the refinancing of your debt in which you take a debt consolidation loan to pay off your other loans.  Debt consolidation does not reduce the loan amount. You still owe the same amount. The only difference is the debt repayment becomes easier as you have only one loan to repay after opting for debt consolidation and you are given a longer repayment period.

What are the advantages of Debt Consolidation?

If you are able to curtail your monthly spending, a debt consolidation can help in:

Reducing your monthly payments

By spreading out the debt repayment period, a debt consolidation loan can reduce your monthly payments to a manageable level which takes off the repayment pressure to some extent. Also, people who have high debts are generally paying “minimum payment” towards their loans which do not reduce the debt. The minimum payment concept only covers the interest amount and you are not paying to reduce the principal amount. Without a debt consolidation loan, you might never pay your debts completely due to the high-interest rates.

Improving your credit score

Your credit score will improve if you are able to make regular payments of your debt consolidation loan since you have no other loans or do not accrue more debt.

Reducing the interest you pay

Credit card dues and some types of personal loans accrue high-interest rates. Debt consolidation loans generally have lower interests than credit card debt depending on the entity you engage with, thereby reducing the interest you pay.

Types of Debt Consolidation Loans

Home Equity Loans

Some licensed money lenders offer home equity loans where your house acts as collateral for the debt consolidation loan.  Home equity loans generally have lower interest rates as the level of risk attached to the lender is lower. The drawback is that your home is on the line for your debt. If you are not able to pay your loan, you risk the foreclosure of your house.

Personal loans

If you are able to borrow a big amount for your personal loan, it can be used to repay multiple debts. Many legal money lenders will offer a large amount as a personal loan but the interest rates of such loans are a bit on the higher side. You can negotiate with the money lender to lower the rate which can be done by extending the loan repayment period

What is the right time to consider Debt Consolidation Loan?

If you are able to make only minimum payment for loans and feel the repayment of loans is becoming unmanageable, it is time to consider debt consolidation.  However, you need to ensure you do not take any loans, including fast cash loans, after paying off other loans as it will make the debt consolidation repayment more difficult.

Getting out of debt needs proper planning.  Making maximum payments towards your loan, reducing spending, and debt consolidation are some of the effective methods to get out of debt.

It is no secret that debts are unwanted for everyone.  For many people, clearing debt is a monolithic task due to limited monthly incomes. The truth is you need proper planning to get out of debt. Here are some good tips to get out of debt, from breaking habits to getting quick loans in Singapore.

Stop Using Credit Cards

Credit card bills that are due are one of the biggest financial problems for many. We become so used to using credit cards that we often forget our capacity to repay. If you are someone who always fails to keep track of your expenses, it will be a good idea to switch from credit cards to debit cards to ensure you only spend what you can afford.

Pay More than the Minimum Due

The minimum due is a sweet financial trap that makes your debt burden. When you choose to pay only the minimum amount due every month, you are not making payment to reduce the principal loan amount. You are only paying part of the interest levied by the credit card issuer. This results in higher interests incurred on a credit card bill due to the small but substantial increases every month. Hence try paying the maximum amount for the credit card due to get out of debt sooner.

Reduce your Spending

When you have fixed monthly incomes, your focus should be on reducing your monthly expenses so that you can allocate more funds for the repayment of your debt.  Take a good look at your monthly budget and create a separate list for monthly necessities and mere wants. You can avoid spending money on your wants, that will leave more money in your hand to repay your debt.

Pay Debts with Higher Interest First

If you have multiple debts; some will have higher interest rates while some will have lower.  You should make a plan to finish paying your debts that have higher interest first. By doing so, the interest generated that you have to pay will be lower compared to paying the loan with lower interest first.

Get a Debt Consolidation Loan

A debt consolidation loan can be a great financial tool to get rid of multiple debts. You can approach a licensed money lender for a debt consolidation loan. These fast approval loans in Singapore have lower interest rates, and you can have longer repayment periods that reduce monthly instalments. By taking a debt consolidation loan, you can quickly pay your loans and focus only on paying the instalments towards debt consolidation loan.

Take a Home Equity Loan

A home equity loan can provide you with a big amount of money that can be used to pay multiple loans. You can approach legal moneylenders for a home equity loan. The moneylender might offer you a lower interest rate as your home is used as collateral for the loan. You need to pay instalment for your home equity loan on time as there is a risk of foreclosure if you default on repayment of the loan.

No matter what method you choose to get out of debt, you should avoid taking new loans until you are completely out of debt.

Our spending habits and financial planning, more than anything else, determine whether we will be trapped in bad debt or have a good credit rating. Most people can avoid bad debts by following these simple rules.

Pay bills on time

Payment history is an important element that affects your credit history. Hence, you need to be aware of bills that you are required to pay every month and diligently pay them on time. If you have missed any payment for 30 days or more, it can have a devastating effect on your credit score. A single late payment can bring your credit score down by several points and if there are several consecutive late payments, you need to prepare yourself for worse things like repossession, foreclosure, collections, and charge-offs.

This also applies to accounts like your mobile phone bills or electricity bills that are not usually reported to the credit bureaus. If you fall too far behind in payment of utility bills, your account may get transferred to a collection agency and that will get listed on your credit score.

Do not take too many loans

Taking quick cash loans in Singapore might be the easiest way to deal with tough financial situations but do not make a habit of taking fast cash loans every now and then. When you have many debts, it is difficult to make repayment of each loan every month and you are more likely to miss loan repayments which will affect your credit score. If you find yourself trapped in multiple debts, you need to approach legal money lenders for a debt consolidation loan.

A debt consolidation loan is a good financial tool to prevent your multiple loans from turning into bad debts. The big amount that you get through the debt consolidation loan can be used to repay multiple loans and then you need to only plan for faster repayment of the debt consolidation loan. Debt consolidation loans have lower interest rates and money lender would be happy to reduce the interest rate further if you offer some collateral against the loan.

Pay your credit card debt at the earliest

Credit card debt has one of the highest interest rates and you should focus on getting it cleared at the earliest. Many people fall into the trap of paying “minimum amount due” every month and the result is the credit card debt increases significantly. The truth behind “minimum amount due” is that the credit card company does not levy any late payment fee in that case. The credit card company still charges interest on the unpaid amount.

If it is difficult for you to pay credit card debt, consider taking a loan from a licensed money lender to get rid of credit card debt. The loan offered by money lenders have may lower interest rates than the interest rate charged by the credit card company.

Prevention is better than collection

You need to take a look at your monthly earnings and spending closely. Make a list of essential expenditures and non-essential spending.  If you have accrued debt, you need to reduce non-essential spending and focus on allocating more funds every month to clear debt.

First-time investors should do a lot of research before they actually invest in anything. Such a decision can be very intimidating if made without research or even purely relying on the advice of friends and family. It is therefore very important to understand what the experts say before diving into the investing scenario. This is especially so if you are considering to get a cash loan in Singapore from legal money lenders to fund your investments. Here are some pieces of advice from experts to help you navigate the investing world out there.

Hire an expert

The first step to becoming an investor without much knowledge is to hire an expert. A financial advisor can advise you regarding where to invest, what the market trends are, and assist you in making buying and selling decisions. Getting expert advice is critical for a first-time investor, particularly someone who may not have much knowledge about the market. However, it is important to choose them carefully, because many financial advisers may just want to earn a commission for unbiased advice. A good way to incentivise them would be to give them performance-based incentives.

Assessing your goals

The first step before actually investing your money is to figure out your short-term and long-term goals for the investment. List down why you may want to invest, e.g. for your retirement, and figure out what is the final value you may want at maturity. This helps you get an idea of what you may have to contribute to your investment every month or each year, and what sort of a return you should be looking at.

Diversification

It is crucial to diversify your investment portfolio. Diversification helps in hedging the risk of the investment and allows for the investor to make greater profits. A good idea would be to go to a financial advisor or a bank to get some idea about the available options. You can also invest in a mutual fund or a hedge fund to minimize your involvement in the investing process while maximizing profits and returns.

Risk tolerance

Determine your risk tolerance before investing. A good idea would be to take an online risk tolerance quiz or go to a financial adviser to help you find yours. Identifying your risk tolerance is very important because once you know how much risk you are willing to take, it is easier to identify what sort of an investment you should make. People with a lower tolerance for risk should ideally go for mutual funds or bonds, while those with a greater tolerance can invest in higher risk instruments, such as options and futures contracts, to make greater profits.

Being Rational

It is very important to keep emotions at bay when making investment decisions. Being emotional and irrational can cause you to suffer significant losses. It is possible that, on days where the market may be falling, many emotional investors end up selling their stocks, hence suffering great losses. Keeping cool in such situations and staying patient is essential because it can make all the difference for your investment portfolio.

Make sure you follow these tips as a first-time investor to help you out with your investment decisions and to make sure you achieve your goals.

If you are thinking of borrowing money, then there are certain precautions that you need to take to ensure that you are. Read on as we discuss some of the significant precautions to consider before applying for fast approval loans in Singapore.

Are You Eligible to Borrow?

You should start by asking yourself if you can afford to borrow money. Most people don’t understand the importance of this question. An answer to the question “Can I afford the amount I am borrowing?” is pretty simple. First of all, make a detailed budget and include all your household expenses in it.

For example, utility bills, monthly expenses for food, educational expenses and transport expenses etc. Also, you can have a look at your previous months’ expenses by getting your bank statements. This will help you to calculate an amount of money that you can save each month. Therefore, you will be able to know very well about the amount of money you can borrow from a fast cash loan in Singapore.

Be Aware of Hidden Charges

Next up is ensuring that your instant cash loan contract does not have any hidden charges. People often borrow money without knowing about any hidden costs that are associated with it. This risky action leads them to regret their decision, and in fact, some are even forced to go into further debt.

To save yourself from getting into such dire financial crisis, do get your money lender to educate you about all the charges that you have to pay, something which legal money lenders have to disclose. Firstly, you should make sure that you return the borrowed amount of money before the due date. This is because if you don’t, you will have to pay a considerable amount of late fees.

Secondly, a fast cash loan from legal money lenders in Singapore can charge a maximum of 10% of the total percentage of the loan as upfront fees. You should know that upfront fees should not exceed 10% of the original loan, if someone is charging more, then don’t bother dealing with that money lender as he or she is probably unlicensed. Lastly, no fast cash legal money lender in Singapore can charge more than 4% interest on the whole amount of loan monthly. If you think you can afford to pay all these charges each month, go ahead and borrow the money.

Consider Borrowing from Relatives

Think thoroughly and decide if you can borrow money from one of your relatives. This can be a difficult choice, but it can save you from high-interest charges, late fees charges and other money lending charges. And if it is okay with your relatives, you can repay them after a long time without denting your relationship with them. In other words, you can borrow money from your relatives on your terms.

Apart from this, there is just one thing to consider before doing so, and that is making sure if your lender is in a financially sound position. Don’t ask family members who themselves are running on a tight budget to lend you money as if you don’t repay them on time; things can get ugly. This can really frustrate your relatives, and it can easily hurt your relationship with them.