Debt consolidation loans have long been a popular way to deal with or lower debt to a more comfortable level. But it is now harder than before to get debt consolidation financial loans because house values have decreased in so many areas. This means there is less equity available to use for debt consolidation. For example, a second mortgage such as a homeowner equity line of credit (HELOC) can be a good way to consolidate debt into a new loan, But because of what’s happened to the housing market, many families have much less equity in their homes so that it’s just not possible for them to get one of these loans.
A new way to handle debt
Since it has become so much more difficult to get debt consolidation loans, there is a new alternate way to handle debt known as POEM. This is an acronym for Plan, Organize, Execute and Monitor.
Historically, debt consolidation financial loans have been used to repay high interest charge card balances or personal financial loans with lower interest unsecured loans. However, due to what has happened to the economy, many lenders such as banks and credit unions have tightened their lending requirements on unsecured debt consolidation financial loans. Or alternately, they’re insisting that borrowers have collateral for what’s called a guaranteed debt consolidation financial loan. This is great for people who have an asset they can pledge for one of these loans but doesn’t work for everyone. This is where POEM can be a useful tool for providing you with enough money to settle your debts and even some extra money for other activities.
How it works
In the Plan stage of POEM you need to determine where you can make cuts in your spending. You will need to determine ways to lower your existing bills or even jettison them. You will need to concentrate on eliminating any and all unnecessary spending. While you may find this hard to believe, it’s a fact that just about everyone can get by with less.
The Organize stage
In the Organize stage, you implement the changes you have decided you can make. Even if you believe you will need a debt consolidation loan, you will still need to determine how much money will be required to make payments on the new loan. This means you’ll have to determine how much you owe on each obligation, how much you could save with a debt consolidation financial loan and how you could pay that new obligation promptly.
The Execute stage
In this stage of POEM, you’ll execute or do those things you planned to get your spending under control. If you’re thinking about debt consolidation financial loans, you will need to contact your bank, credit union or go online to see if you would qualify for one. One good thing about applying for a loan online is that you usually have to fill out just one form to get offers from several different lenders. What do you do if you can’t qualify for one of these loans? Then you’ll need to begin saving every penny you can. For example, you might eliminate the cable TV or increase the deductible rates on your auto insurance.
The ultimate stage–Monitor
The ultimate step in POEM is to start monitoring your spending to make sure you are keeping it under control. If you can’t control your spending, you may choose to get a debt consolidation financial loan. Unfortunately, many people will choose debt consolidation financial loans, rather than trying to regulate their spending habits. If you choose to do this, your cycle of debt could begin once again and make the POEM technique an even better option than debt consolidation financial loans.