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Consolidation loans saved me!

Consolidation loans - is it for you?

Consolidation loans – is it for you?

A quick background on how I ended up opting for consolidation loans:

About 8 years back, I was stuck in a vicious circle of debt.  It all started a few years earlier.  I had just married and bought a new house.  At the time I had a good job in what you may call “upper middle management” of a large corporation.  Then the part of the corporation I worked was sold to a Chinese group in a pretty surprising takeover (among other things the company that bought was much smaller than we were).  We didn’t initially expect much changes, but within 18 months practically all production and R&D had been moved to China and it was becoming pretty clear that the main interest of the Chinese had been the brand and intellectual property, and they never had any intention of keeping any real operations in the US.

As a result of this I was laid off.  I got a new, pretty good, job within 10 months.  But during these months we had been struggling financially.  We had solved that by basically maxing out our credit cards and buying everything we could on credit.  Obviously not the best situation, but at the time we didn’t have much choice – my wife was pregnant and we had a new house with a mortgage.  And we were pretty confident I would get a job quickly.

What we didn’t realize was the enormous borrowing costs on these types of credits.  Even after I got the new job it was clear that we were going to have a problem paying back the debt.  Facing defaulting on our house mortgage we were several times forced to increase our limits on our credit cards (my salary was pretty good so increased credits was easily accepted) and using credit card debt to pay the house mortgage.

The situation kept escalating and caused a good deal of stress and anxiety.  Male pride prevented me from talking to anyone about the problem, but in the end I felt I could no longer handle it and contacted Ardwine Schultz, a local debt advisor.  For me this was a huge turning point.  Not only did I get to sit down with a professional and really look at my situation objectively and try to analyse where the problem arouse, but he also from the first meeting made it clear that this was manageable if only short term consumer debt was converted to longer consolidated loans.

I’ll spare you the boring details, but within 4 weeks he had managed to negotiate a deal with a bank for consolidation loans.  I was able to use my car as security for part of the loan, and the bank accepted an additional charge on the house for another part.  The rest remained as unsecured debt, but still at much better interest than my card debt.  In the end the consolidation loans reduced my monthly repayments by over $650 – enough to balance my monthly budget and end the vicious circle of borrowing more to repay old debts.  The repayment period was lengthened to 60 months, but even after that the lower interest rates gave a total of nearly $10,000 less in borrowing costs over the whole loan period!

Basically consolidation loans saved me from complete financial ruin.  I am not saying it will be helpful to everyone, but I still think it is important for people to be aware of this option and that is why I am putting together this website.  If you do end up in a situation like mine, the sooner you take actions, the better it is!

How to manage your debt properly?

Manage debts with consolidation loans

Manage debts with consolidation loans

Managing your debts is important regardless of your financial situation – only by being aware of what you are paying and how your debt is structured will you be sure of not running into any problems in the future and also sure of not spending money on expensive loans that could be easily converted in to cheaper long term loans.  Here are some of the things I did to get my debts under control:

Always know who you owe money to – and how much

This means keeping track of all your creditors – including stores where you have shopped on credit and all credit cards you use.

Put them in a spreadsheet and list the amount you owe in the column next to each creditor.  At the end sum up all the debts you have.  This may be a bit of a nasty shock if you haven’t been keeping proper track of your debts so far.  Don’t worry – it is better knowing the facts than pulling wool over your eyes.

Always knows your borrowing terms (interest rates and fees)

While you are working on the spreadsheet, make sure to also add in the interest rate and fees you are paying and your monthly payments.  Try to identify any debt that seems to carry very high costs.  You may be able to consolidate some of this debt into a cheaper bank loan.

Make sure you pay you bills on time

Late payment fees can be very expensive.  Not paying a bill because you don’t have the money is one thing – it is a serious problem that we are trying to help you avoid on these pages.  But not paying because you forget or don’t keep track is just plain stupid.  Late payment fees can accumulate to hundreds and even thousands of dollars over time!  And many financial institutions may increase your interest rate if you don’t pay on time.  I ended up creating a monthly bill payment calendar to make sure I never wasted money on late payment charges.

Always make at least the minimum payment

If you cannot afford to pay off anything more, then at least make the minimum payment for your debt.  This won’t actually reduce your debt as such, but at least it keeps it from growing.

Build up an emergency fund to fall back on

As soon as you have any money to spear, use some of it to build a fund to fall back on, should you suddenly receive a surprise bill.  It will prevent you from having to take out expensive short term loans.

Debt consolidation FAQ

Consolidation loans - FAQ

Consolidation loans – FAQ

Here are some answers to common questions I hear when I talk to people about consolidation loans.


Consolidation loans are basically what the name says – one or more loan that is taken out to consolidate many smaller loans.

Consolidation loans can be used in all cases where the debtor has more than one loan – but are most often used where at least some of the debt is credit card debts or other unsecured debts with high interest rates.

The advantages of consolidation loans are usually a combination of lower interest rates and a longer repayment period.  This gives the borrower much lower monthly costs.

A downside of consolidation loans is that because the repayment period is usually increased, the total borrowing costs can increase.  The reduced interest rate, however, often offsets this and gives a reduction in the total loan cost for the duration of the loan.

This article XXX explains all you need to know about consolidation loans.


You can consider consolidating your debt in any circumstance where you have more than one loan.  It is usually worth considering debt consolidation when parts of your debts are credit card related or high interest consumer credit loans.


No, you can usually consolidate your debts even if you are not in a position to offer any security.  But in order to achieve the lowest interest rates possible, you should consider offering any security you can (house, cars and other assets).  Many financial institutions will even work with security offered by third parties – such as relatives.

Debt management plans (DMP)

Money Worries - DMP may be right for you!

Money Worries – DMP may be right for you!

I never did join a DMP, as the debt councilor felt that with proper restructuring and debt consolidation I would be able to handle the loans properly.  But I know that a lot of people are interested in knowing more about DMP – and if you do end up in a situation where even after debt consolidation you have a problem making your monthly payments, then DMP may be right for you.

In general, if your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. Don’t sign up for one of these plans unless a certified credit counselor has spent thoroughly reviewed your financial situation and has concluded DMP may be the right choice for you.  Even if a DMP is advisablein your situation, a good credit counseling agency can still help you set up a budget and teach you good home financial management skills.

When you participate in a DMP you will deposit money with you credit counselling agency each month.  They will then use your deposit to pay your debts – such as your home loans, student loans, credit card bills etc.  Under such a scheme the agency may negotiate with your lenders in order to try to make them accept lower interest rates or waive certain fees.  A DMP requires you to make regular payments on time and it could take up to 48 months to complete your DMP.  You will usually be asked to agree to economic limitations for yourself during the DMP – such as agreeing not to apply for further loans or credit cards while participating in the plan.

If a DMP is the right thing for you, make sure to sign up for a plan with an agency that allows all your creditors to be paid prior to your payment due dates and with the correct billing cycle.

Always make sure to pay your bills on time yourself until your creditors have approved the DMP.  If you stop making payments to a creditor before he has accepted your DMP, you may face late payment fees, penalties, and negative credit score.