How To Consolidate Your Debts in Mississippi

Collect the Details About Your Debts 

You’ll want to start by collecting the details of the debts you would like to consolidate. You’ll need to know who you owe, how much you owe them, your minimum monthly payment, your annual interest rate, late fees, over-the-limit fees and any other loan terms that might be important to include in your Mississippi debt consolidation deliberation process. In most instances, the best way to obtain all of these details will be with your most recent credit card statements. However, you should collect details on other debts you have as well, like car loans, medical bills, and student loans. Even if these debts cannot be consolidated, your credit counselor will use this information to help you create your broader financial action plan. You should also obtain a free copy of your annual credit report to ensure the accuracy of the details in your statements and make sure you do not overlook any outstanding debts.

Determine Your Monthly Income

Because you need a steady, reliable monthly income to make monthly debt consolidation payments, assessing your monthly income is just as important as assessing your debts when it comes to determining whether debt consolidation is right for you. Generally speaking, the best measure of your regular monthly income is the pay reflected in your two most recent paychecks. Just make sure not to include any overtime or special pay in your calculation. Additionally, be sure to note whether you are paid bi-weekly or semi-monthly. If you are paid bi-weekly, your monthly income is not simply your paycheck multiplied by two every month. Bi-weekly income occurs every two weeks, 26 times per year and generally includes 80 hours. Semi-monthly income, on the other hand, occurs twice per month, 24 times per year and generally includes 88.67 hours each pay period. As a result, if you get paid bi-weekly you receive two more checks per year than someone who gets paid semi-monthly, however your checks are about ten percent smaller each pay period. You can determine your pay frequency by looking at your monthly pay stub. 

Put Together Your Budget

One of the most important tools for proper money management is a sensible and realistic budget. A budget is a snapshot of your income and expenses over a certain period of time. For purposes of debt consolidation, the period of time you’ll want to use is a month. You’ll use your budget to track the income you bring in every month (regularly) and the expenses you pay out. The difference between these two is known as your “disposable income.” As you track your expenses, divide them into two categories, “fixed costs” and “variable costs.” Variable costs are those expenses you can usually control to some extent every month. Fixed costs include expenses that do not fluctuate more than $10 per month such as your rent or mortgage payment, auto loans, student loans, and insurance. Variable costs include expenses that fluctuate from month to month such as gas, groceries, recreation, and entertainment. If you do your calculation and do not have any disposable income left, or you have significantly more disposable income available to you than makes sense, try to identify the source(s) of the inconsistency. Potential reasons for inconsistencies may include:

• Very high disposable income - compare this to your monthly debt payments. Are your numbers in line to show an accurate figure of what you have left every month? If not, what is the reason?

• Missing expenses. Check your bank statements and receipts to see if you have accounted for all your expenses. Pay attention to bills that get paid automatically that you might have missed, like gym memberships.

• Did you make any serious errors and omissions in calculating your monthly income by using paychecks that include a lot of overtime? Your budget needs to be based on your regular, steady income sources before you can make an informed decision about debt consolidation.

Do the Math

You can get a quick preview of whether or not debt consolidation is a good debt relief option for you by doing a little math. Using the total amount of debt you came up with when you detailed your debts, divide that number by 60 months if you feel you might need five years to pay off all your debt. The result is the approximate monthly debt consolidation loan payment you would have during that period of time. The number is an approximation because it will be slightly higher or lower depending on the interest rate you get on your debt consolidation loan and whether or not any of your creditors grant you a reduction in principal. 

Review Your Mississippi Debt Consolidation Options

Before you apply for Mississippi debt consolidation, you should use the information you have put together so far, along with your budget, to review your debt consolidation options and narrow down the type of debt consolidation that is best for you. A few of the things you should take into account when making your decision include:

• Are most of your debts secured or unsecured? If secured, then debt consolidation may not be a good option for you unless you have good enough credit to take out a new personal loan.

• What is your credit score? Do you have good, bad or fair credit?

• Some forms of debt consolidation require good credit like an unsecured personal loan. However, other forms of debt consolidation, like a DMP, do not.

• How many credit cards do you have? Do you intend to consolidate your debts and then close them all? Or do you want to consolidate your debts but keep some of your credit lines open. If so, a credit card balance transfer may be what you are looking for.

• Do you have a lot of high interest rate debt? If lowering the interest rate on your debts is the most important factor for you in a debt consolidation then refinancing your mortgage, or a home equity line of credit might be a great option.

Apply for a Mississippi Debt Consolidation Loan

If you choose to apply for your Mississippi debt consolidation loan, here are a few tips to keep you from being taken advantage of:       

• Don’t overlook your local bank or credit union. If you have good credit or some form of collateral you may be able to get good terms on a debt consolidation loan.      

• Avoid direct mail offers. Despite the claims made in most direct mail advertisements, many of the terms and conditions advertised have a lot of preconditions or are simply false.

• Look for brick and mortar lenders. If you do decide to respond to a direct mail offer only deal with lenders who have brick and mortar locations where you can apply for your loan.     

• Never “pay” for a loan upfront. If a lender indicates you have been approved for a loan but need to pay a fee upfront before the funds are released, do not do it. Legitimate lenders only get paid after they have provided a service.

• Do not give out your personal information over the phone or cash unsolicited checks received in the mail. Both of these actions expose you to fraud.

How to Stay Current with Payments After Consolidating Your Debts in Mississippi   

After you have consolidated your debts in Mississippi, there are few things you can do to make sure you stay current with your debt consolidation payments:

• Make your payment early. Making your debt consolidation payment early reduces the chance that you will use any income you have available to meet an alternative financial need.

• Set aside funds for large, one-time expenses that occur throughout the year like tax payments, vehicle registration and tuition. Otherwise, it’ll be harder to make your debt consolidation payment because you’ll be racing to pay these other expenses.        

• Set your own due date. Ask your credit counselor if you can set the due date for your debt consolidation loan so it does not fall on the first or last day of the month when other large expenses are probably due.

• Reward yourself. Treat yourself to small rewards as you make regular payments as an incentive to successfully complete your debt consolidation.