Finance Point

The availability of credit and loans today has helped to fast forward today’s population into a vortex of debt and chaos. You would think that the easy availability of credit cards and loans would be helpful for people to live better, to be happier, to lead a more balanced life.

However, what actually happens is that they get addicted to buying useless things and wrap themselves into a limitless indebtedness, which can paralyze them. Often such predicament leads to declaration of bankruptcy and waste of precious year of one’s life in struggling to repair bad credit ratings.

What you can do when you find yourself hopelessly entrenched in debt? Consolidate all your debts or bills into one, a new loan, a bill consolidation loan. Take heed of the following advice which is basically about bill consolidation, and maybe you will be free of debt very soon - hopefully after having learnt a very precious lesson from your experience:

1. Get professional help - there are many non-profit organizations out there, which specialize in debt management and would be glad to offer you help and advice on how to manage yours. Get help! Do not be shy to admit you have a debt problem - because unless you reach out, nobody can come to your rescue.

2. Consider the possibility of taking a personal loan - here personal loan means not the one you apply from a bank, but the one you would ask from a friend or relative who trusts you enough to lend you money when your chips are down. Ensure though you put the agreement in writing lest you would be tempted to "forget" about it and hence destroy a good relationship.

3. Consider a home equity loan - what about a home equity loan with which you could clear off all your debts in one sweep and the concentrate in repaying only one, i.e. the home equity loan. The catch here is that the financial organization from where you would take your loan would require your home as collateral - which is pretty risky if you do not have a regular and sufficient source of income. Ensure that you bargain for the lowest possible rates, in case you do choose to take up this option to bail you out from your debts.

4. Cash on your life insurance policies - you might like to consider a loan against your life insurance policy depending upon its value at maturity. This is an excellent option because the interest rates charged here are often the lowest when compared to other sources.

5. Consider credit cards unions - these are special organizations, which would lend you money to repay your credit card debts, at a much lowers rate than the credit card is charging you. Check out with the organization you are working in; most large organizations have a credit card union on their premises.

6. Borrow against your retirement fund - while this will give you a very good rate of interest, it would be good to keep this option last because it is not advisable to meddle with your savings for the future.

QUESTION: I do not seem to be making much progress toward paying down my credit card debt. Some months I am able to send in only the minimum payment amount. Would it be a good idea to get a home equity loan to pay off my personal credit card balances?

ANSWER: Interest will continue to be charged on your unpaid credit card balances. Therefore, the longer you carry unpaid balances, the more interest you will owe. If you make only the minimum payments, it could take you years to pay off your current credit card debt. If you keep on charging additional amounts that you can not pay in full, you may never pay it all off. Even after forking over thousands of dollars in interest, you could still find yourself saddled with a tremendous amount of consumer debt years from now.

Eliminating credit card debt can be a big step toward improving your financial well-being. One of the most effective ways to manage your personal debt is to establish and follow a budget. A realistic budget can help you reduce your spending. Budgeting could also make more of your existing funds available to pay down your credit card debt.

In addition to working within a budget, you may want to consider using the proceeds from a home equity loan to pay off your consumer debt. However, before you take out a home equity loan, make sure you have a reliable plan to pay it back. If you were to default on the loan, you could lose your home. Read More

Pennsylvania home builder Elliott Building Group Ltd. filed for Chapter 11 protection, the latest industry victim to succumb to declining sales caused by a cooling housing market.

Elliott Building filed for Chapter 11 protection Sunday listing assets of more than $60 million and debts of $79 million. The Langhorne, Pa.-based developer builds homes in southeast Pennsylvania and southern New Jersey.

Company owner Bradford Elliot said in court papers that the builder opted to file for Chapter 11 after several banks received judgments against it and contractors threatened to force the company into an involuntary bankruptcy. Read More