Here is how it works: The method requires you to take out a low interest loan which usually stretches out your payments for longer than your current payments. You use this low interest loan and pay all your current debts and now you only have one low monthly payment.

Here is what you should know: The universal first rule of becoming debt free is to stop acquiring more debt. The new loan you just took out with its low interest, just broke to first rule. Interest is the sole reason your debts take so long to pay off. The longer it takes to pay off any loan the more you pay in interest. If you owe $10,000 on all your debts combined and it would take you 5 years to pay off at your current rate of payment. Getting a loan for $10,000 at an interest rate even half your current interest rate will cost you more and take longer to pay off. On top of all this you will not gain the knowledge required to stay out of debt once you do get out.

Here is what you should do: Take the time to learn real debt eliminating methods such as the debt snowball method and building up an emergency account. These techniques will not only get you out of debt faster and completely, it is more likely you will stay out of debt forever. Non profit debt consolidation companies have there place, but 90% of people in debt do not need them.

Well, first you have to ask yourself where do you want to be a 5 to 10 years. A financial planning consultant will not make your goals for you, they are there to create a clear plan to help you reach your long and short term goals as fast as possible. If your goal is to expend your family, you might need a bigger house or more income. Your consultant will help you with your questions about mortgage, investing for your child’s future and when and how to start a college fund. If your goal is to get out of debt, they will work with you to find a plan the fits you. Help you set up payment plans with your creditors and show you ways to stay on track while paying off your debt.

People that need financial consulting are those that live busy lives or find it hard to manage their money. If you find it challenging to put together a retirement plan or to choose the type on investments to fit your goals, then you may need the help of a financial consultant. When you are ready to hire an advisor, look for one that is both professional and easy to get along with. You will have to spend a lot of time both in person and on the phone, so it would be best if you work well together. Also make sure you check their credentials before you decide to hire them. You don’t want someone with little experience giving you advice abut your financial future.

HOW IT WORKS.

First you should save a little backup just in case you hit a bump down the road you can continue making your payments on time. About 2 months of all you minimum payments combined and the current bill you are working on.

Make a list of all your bills and depending on which method you chose place them in lowest amount owed first or highest interest first. Start paying all the minimum payments on all you debts except the first one on you list. Take all the money you have from paying only the minimum payments on the rest of your bills and any extra you can come up with every month and pay off the first bill. After the first debt is paid move on to the next one on your list. Add all the money you use to pay on the first bill to the minimum payment you are paying on this bill until it is paid off. Continue the process until all your debts are paid in full.

As you can see, it is like a snow ball rolling down a hill. The best part of the debt snowball is that you can see your progress as you finish paying of a debt. This will help to keep you motivated through out the entire process.