DEBT CONSOLIDATION - GENERALLY

Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.
Sometimes, debt consolidation companies can discount the amount of the loan. When the debtor is in danger of bankruptcy, the debt consolidator will buy the loan at a discount. A prudent debtor can shop around for consolidators who will pass along some of the savings. Consolidation can affect the ability of the debtor to discharge debts in bankruptcy, so the decision to consolidate must be weighed carefully.
Debt consolidation is often advisable in theory when someone is paying credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest.

TIPS TO BECOME DEBT FREE

As we know, sometimes it's very easy to get a loan ( maybe not that easy nowadays due to world economic situation ) but the facts is, it's not easy to maintain the repayment of the loan. That's why, it is very important we must have a plan how to overcome or handle our financial demands.

Some of the tips to become debt free as follows:

1) Budgeting is a great tool that allows you to plan your finances; therefore, making living within your means an achievable accomplishment. Moreover, having a financial plan that helps you manage your fiances in such a way so you will have money left over when all your bills are paid is very important for your financial future.
2) Pay Yourself First- Bob Ewing wrote an excellent Hub about paying yourself first. Begin by saving five to ten percent in the beginning, then develop more ways to cut expenses and stash more in savings or pay off a debt.
3) Eat All of Your Meals at Home as eating out every night can take a huge chunk out of your income. However, one of the easiest ways to living debt free is cooking all of your meals at home. The USDA creates an annual breakdown of the cost of food for Americans on four levels: Thrifty plan, Low-cost plan, Moderate-plan and Liberal plan. This is provided that all meals and snacks are purchased at stores at regular price and prepared at home.
4) Borrow Movies - instead of paying to rent movies at the video store, borrow them from the library. Borrowing movies from the local library is an absolutely free service. If you are unable to find what you want there, request it.
5) Cut Back or Quit Smoking as if you smoke, cut back or quit. A two pack a day habit could be costing as much as $5,200 a year. Kicking the habit will make you and your bank account much healthier in the long run!
6) Never Spend a Windfall - If you receive a bonus, income-tax refund, rebate check, or holiday money—place it in some type of savings account or pay off a bill.
7) Purchase Low Maintenance and look at the bigger picture for every purchase. Always consider quality, price and maintenance costs. Sometimes, paying a little extra for an item will cost less in maintenance in the future.
8) Everything is negotiable - Never be afraid to bargain for a better price or rate on airfares, hotel stays, appliances, vehicles, credit cards, interest rates or anything!
9) Cancel Paid Subscriptions - Cancel all magazine subscriptions that are not free. Get the news from the Internet, radio or television.
10) SimplifyHold a huge garage sale or sell it on an online auction site. If you have not used an item in six months, odds are you can do without it. Donate the items to a local charity if you do not want the hassle of a yard sale, or selling online. It may be tax-deductible and helps others in the process.

11) Priorities your bills. Select the most important bills and try to pay before due as to avoid any interest or penalty charges.

Hopefully the tips are useful enough for you to start your plan to become debt free.

DEBT FREE AND FINANCING

How to become debt free? Do you make any plan before taking or apply loan? How does your repayment sechedule effect your financial? This is common question about to become debt free or loan financing.

Loan is an arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capital markets have developed many ways of managing this risk).
Refinancing is to provide new financing or new financing for, as by discharging a mortgage with the proceeds from a new mortgage obtained at a lower interest rate

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collacteral for the loan.
A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.
In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

Unsecured loan are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages such as credit card debt,personal loans, bank overdrafts, credit facilities or lines of credit and corporate bonds. The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law.