How to Consolidate Your Debts in Nebraska

Collect the Details About Your Debts 

The first thing you want to do before determining whether Nebraska debt consolidation makes sense for you, involves collecting details about the debts you want to consolidate. For each account, track down details about your current balance, minimum payment, annual interest rate, due date, late fees, over-the-limit fees, annual fees, and other loan terms pertaining to your debt. Even though it is unlikely they will be included in your debt consolidation process, you should also collect details on secured and other long-term debts you may have such as car loans, personal loans, payday loans, and student loans. To be sure you do not neglect to include any of your debts, obtain a free copy of your annual credit report and review it at this time.

Determine Your Monthly Income

Creating an accurate picture of your monthly income is essential to successful debt consolidation. Your monthly income will determine how much you can afford to pay every month to consolidate your debts. To determine your monthly income, reference the income reflected in your two most recent paycheck stubs. Provided that these paychecks are typical of what you bring in every month and do not include overtime or other extra pay, they should give you an accurate picture of your regular monthly income. If you only get paid on commission or are self-employed and do not take a regular paycheck, make sure that it is clear that you always have access to enough income to pay your living expenses and still make your monthly Nebraska debt consolidation loan payment before committing to this process.

Put Together Your Budget

The next step in consolidating your debts in Nebraska involves putting together your budget. Your budget will serve as a ledger of the income you bring in every month and the expenses you pay out. Calculating your expenses requires some explanation as well. You should divide your expenses into two categories: fixed and variable expenses. Fixed costs are those expenses you pay every month that do not fluctuate more than $10 per month, like rent and insurance. Variable expenses are expenses you pay that vary from month-to-month like gas, grocery recreation, entertainment, and utilities. By deducting all of your expenses (not including the debt payments on accounts you hope to consolidate), both fixed and variable, from your income you will get your disposable income. The more disposable income you have, the more of your debts you will be able to consolidate.

Do the Math 

It’s now time to do some simple math to determine whether a Nebraska debt consolidation loan is a feasible debt relief solution for you. Using your total debt amount you hope to consolidate, current total monthly debt payments on that combined debt, and disposable income after fixed and variable expenses, you can project what your monthly debt consolidation loan payment might be and whether you can afford to pay it every month. First, take your total debt amount that you hope to consolidate and divide it by 60. Sixty is the number of monthly payments you would make to be debt-free in five years. Take the result and compare it to your disposable income. Your disposable income should exceed your projected debt consolidation loan payment. If it does not, that is probably an indication debt consolidation is not the best debt relief option for you. But before giving up on this opportunity, see if it is possible to increase your disposable income by looking at ways to lower spending on your variable expenses.

Review Your Nebraska Debt Consolidation Options

If Nebraska debt consolidation is feasible for you, the next thing you will have to do is decide what type of loan is best for your situation. When making this determination, there are a lot of factors that will play a role in your decision. These factors will include your current credit score, the amount of debt you need to consolidate and how long you would like to repay the loan. Before you make a final decision, consider weighing some pros and cons associated with the most common debt consolidation loan options:

• Personal loans. If you have good credit and need to consolidate more than just credit card debt, a personal loan is a good option. However, you will need good credit and you may not necessarily get a low-interest rate on the loan.     

• Credit card balance transfer. If you have good credit but most of your debt is credit card debt, a credit card balance transfer is a good choice. But approach this option with caution because they tend to feature promotional interest rates that will increase sharply if you have not paid the balance off by the time the promotional period ends.

• Refinancing your mortgage. If you own your home, refinancing your mortgage to pay off debt is a popular way of pursuing debt consolidation. Note that while refinancing will usually significantly lower the interest rate you pay on the debt, it will also increase the balance owed on your mortgage. You will also be taking unsecured debt and securing it with your home.

• A home equity loan. Similar to refinancing, a home equity loan usually offers a very low-interest rate on the debt you consolidate. But just like refinancing, you are taking unsecured debt and securing it with the equity in your home. Meaning, if you default on the loan you risk losing your home.

• A debt management plan. A debt management plan does not require you to take out a new loan and does not require you to have good credit. Like a debt consolidation loan, a debt management plan consolidates your unsecured credit card debt into one single monthly payment. You then make the payment to a non-profit agency which then distributes it to your creditors. 

Apply for a Nebraska Debt Consolidation Loan

The last major step you’ll need to take when setting up debt consolidation in Nebraska involves selecting a lender to fund your debt consolidation loan. When you first start inquiring about debt consolidation, you will probably come across many different lenders competing for your business. Traditional banks and credit unions, mortgage companies, online lenders, and credit card providers will claim they are a better choice than the others. In order to help you make an informed decision and reduce the likelihood of being scammed or taken advantage of, here are some best practices you may want to follow:

• If possible, deal with your own bank or credit union. Ask your account representative what options are available for debt consolidation and whether you qualify for any of them.

• Try to avoid online lenders and direct mail companies who make claims that sound too good to be true. Review any offers or ads you come across thoroughly and always read the fine print.

• Never deposit any checks you receive in the mail that you were not expecting to receive. This not only exposes you to fraud but may obligate you to repay far more than you received.

• Compare the terms and conditions you can get with a debt management plan to the terms and conditions you are offered with a debt consolidation loan. A debt management plan can consolidate your unsecured debt regardless of your credit score. 

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

Once you have consolidated your debts with a Nebraska debt consolidation loan, the last thing you probably intend to do is fall behind on your payments. But even with the best intentions, unforeseen circumstances can cause you to miss a payment and get behind on your Nebraska debt consolidation loan. Fortunately, they are a few things you can do now to stay current with your payments after consolidating your debts, including:

• Make sure your payment is not due on the same day as other large monthly expenses. If it is, ask in advance to have the due date changed.

• Track your monthly spending. You should never miss your debt consolidation loan payment because you have already spent the funds that were supposed to be reserved for this purpose.

• Prepare for unforeseen expenses. Set extra money aside to pay for unforeseen expenses like car repairs, insurance increases or medical bills.

• Start an auto bill pay. Ask your bank or credit union to enroll your debt consolidation loan into an automatic bill payment program. This way, the payment will get made whether you remember to pay it or not.