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January 8, 2008

Debt Reduction Tips To Help Start Off Your New Year

Debt Consolidation

When you look ahead to the coming year, are you filled with anticipation or worried about dealing with money troubles?

If you're feeling concerned about your financial stability, you might consider making debt reduction one of your top New Year's resolutions. Here are a few tips that may help you reduce your debt (and your money-related stress):

A debt consolidation loan may also be helpful as you work toward reaching your financial goals. Debt consolidation means uniting all your individual debts into a single debt and the loan taken in order to cover these individual loans under a single entity is known as a debt consolidation loan. These loans are usually secured against an asset that serves as collateral, so in case of default, the borrower agrees to allow a forced sale of that collateral in order to repay the loan. Collateralization reduces both a lender's risk and the interest rate on debt consolidation loans.

Debt consolidation allows borrowers to consolidate their individual bills into one low-interest account, while at the same time reducing the risk of late payments, since only one monthly payment must be made.

A debt consolidation loan is also particularly effective for those looking to reduce credit-card debt, since it allows borrowers to pay off all credit balances at once. This not only reduces a borrower's monthly payments, but also results in substantial savings on interest paid over the long term. Borrowers should keep in mind, however, that they'll be increasing their total repayment amount due to interest accumulation over the long term.

It's also important to remember that consolidation, while a helpful tool to consistently and effectively reduce debt, is not without its perils. Here's a list of pros and cons to keep in mind when considering a debt consolidation loan:

Pros: Cons:

A new year means new opportunities, and you don't have to stay in debt forever. If you're certain to carefully research and comparison-shop, a debt consolidation loan may be your ticket to a better financial picture in 2008.

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