MMI offers a wide variety of financial services to help improve your financial life. No matter what your financial situation, we can help you to establish an plan of action for achieving your financial goals.
Knowledge is the key to successful money management. Our resources are designed to inspire and assist you as you begin to make positive changes in your financial life.
Interact with MMI in a variety of formats including email, videos, tweets, blog posts, and pictures.
Since 1958, MMI has been a leading provider of financial counseling and education services. We invite you to learn more about the organization and its leadership.
You’ve got the big credit card due on the 7th, the little credit card on the 15th, and the emergency card that you use for more than emergencies because you get double points on groceries and everybody needs groceries on the 18th. Then there’s that special medical credit card they made you open when your cat needed dental surgery, your Target card, your gas card and the card you opened to get 15% off jeans at that place in the mall that you’re not allowed to go back to because you bought too many jeans that one time.
And all of that’s not including your mortgage, your car payment, your student loan payment, your electric bill, your gas bill, your internet, cable, phone, Netflix and on and on…
It’s easy to see why debt consolidation is so appealing. If nothing else, the ability to simplify your finances and reduce the number of payments you make each month means less work and fewer opportunities to accidentally forget one of your bills. However, it's important to understand why debt consolidation may not be a good idea.
Debt consolidation exists because it’s beneficial to lenders. Debt consolidation is popular because it’s often beneficial to consumers. When debt consolidation loans, balance transfers, debt management programs and mortgage refinances are mutually beneficial, they’re a great way to put your financial house back in order.
But when are they not in your best interests? There are a few circumstances where consolidating your bills can cause more harm than good, so see if you fall into any of these categories and weigh the pros and cons before signing off on that consolidation.
One of the primary benefits of debt consolidation should be breathing room. By combining a number of small, variable payments into one (usually) fixed payment, you should find some space opening up in your budget.
What you do with that space determines whether or not the consolidation is going to work.
If you view that breathing room as an opportunity to continue stretching yourself financially – to pay for wants instead of needs – you’ll very quickly find that breathing room disappearing and your ability to manage your new budget extremely taxed.
Do not approach debt consolidation as a one-stop fix for all of your financial worries. If you have bad money habits that you’re not addressing or issues maintaining a healthy budget, debt consolidation will only delay your financial problems. Instead, focus on the issues that lead you to consider a consolidation first – once you’ve addressed those, then consolidation might be the right tool for you.
One of the more popular forms of consolidation is refinancing your home or taking out a home equity loan. This usually makes sense financially, because those loan rates are almost always going to be significantly lower than credit card rates.
The trouble here is that you’re converting unsecured debt into secured debt and putting your house at risk in the process.
If you’re living on the financial edge, with out-of-control credit card bills, it may be appealing to roll those debts into your mortgage and deal with that new fixed payment every month. Just remember – if you fail to pay your credit cards they’ll go into default, they might go to collections and you could even be sued for them, BUT your house would be unaffected. Once you’ve rolled your credit card debt into your mortgage it can’t be separated again, and if you default on the new combined mortgage payment then you can lose your house.
The key is to look long and hard at your finances before including your unsecured debt in a refinance or home equity loan and make sure you’re prepared for a worst case scenario. Dealing with debt collectors isn’t any fun. Filing for bankruptcy is even less fun. But losing your home is the worst. So be careful.
Debt consolidation – in whatever form – will almost always have an impact on your credit score, and it’s usually a negative impact.
Most major credit scoring systems use the age of your accounts as part of how your score is calculated. Older accounts have a more positive impact on credit scores because they reflect a proven track record of creditworthiness. When you consolidate your debts, the old accounts are closed and replaced by one new account.
So simply keep that in mind before proceeding with a consolidation. If you’ve got a good score and can manage your individual accounts well enough at the moment, consolidation might not be in your best interests.
Before agreeing to any kind of debt consolidation make sure you fully understand the terms. Some things to ask yourself include:
Take the time to do the math where necessary. Something that seems to be good for you today might not be so great in a year.
One form of debt consolidation that stands separate from the rest is debt settlement. It’s incredibly important to know what you’re getting yourself into with any consolidation, but debt settlement can be especially damaging.
As refresher, here’s how most debt settlement companies work:
This kind of consolidation is costly (the debt settlement company’s fee will usually be substantial) and will make it extremely difficult for you to obtain credit again in the immediate future. If you’re hoping to use a consolidation to get your finances back in order you might want to pass on debt settlement.
If you aren't satisfied with your bank's credit card because of high interest rates and hidden fees, consider dropping it for a credit union. If you or an immediate family member is a part of the United States armed forces of a government contractor, Pentagon Federal Credit Union (aka PenFed) is supplying the PenFed Promise Visa card. Reduced rates and no charges at all clean up the money-wasting mess in a hurry. A short term loan will help you pay your credit card bill.
I am looking for the help that stops me from shopping and purchasing things that I don't need. I am a shopaholic and it has me depressed sometimes. I know I can consolidate debt, because I have and three months later I am there again. HELP!!!
Do you fall to the trap of assuming that your sole purpose in life is to be useful? Discovering your personal bliss may include accomplishment, but the full, balanced scope of your existence may include times where being lazy is just as appealing. Here are some ideas for enjoying totally free or affordable fun, all the while displaying a marked lack of productivity. Article source: easy way to get free money without paying money
After four years of a five year debt consolidation plan with MMI we are so pleased to see the end in sight. Every month we can see the balance heading toward zero. We have come a long way but it was worth it. Thanks MMI
You overlooked mentioning that the amount of debt that is "forgiven" through the settlement is viewed as taxable income by the IRS and is reported as such on a 1099-MISC which must be reported as income and is taxed on the debtor's annual tax return.Not only is there a tax consequence, but this can also affect credits that the debtor might otherwise qualify for such as EITC.
Brenda - It sounds like you're really struggling, and I'm so sorry to hear that. As cliche as it may sound, I first want to commend you on recognizing your problem. That is honestly the biggest step in recovering from any kind of addiction. Because you're able to recognize the problem, as a next step, I would recommend trying to find a support group in your area. In fact, there's a website for people who suffer from shopping addiction (debtorsanonymous.org), where you'll find a variety of resources and tools, as well as a list of meetings in your area. I hope this helps! I wish you all the best!
looking to consolidate 26,000
This is something that I have been going back and fourth on. It's important to think about all the possibilities first. I'll have to think about this more now before making any decisions.
Thank you this information! It was very helpful to see the break down in the difference between debt consolidation and debt settlement programs. It assists me making a more informative decision. When you ask a company for information they usually attempt to pressure you into agreeing to something without providing all the perimeters of the program.
Loans & Credit,
Auto Loan Resources,
Financial Literacy Month,
Kids & Money,
Debt Management Program
Student Loan Counseling
Foreclosure Prevention Counseling
Reverse Mortgage Counseling
Pre Purchase Housing Counseling
How To Manage Your Money
Money Management For Kids
How To Budget
Blogging for Change
Ask the Experts
Share Your Stories
© 2016 Money Management International, 14141 Southwest Freeway, Suite 1000, Sugar Land, TX.