One of the easiest ways to reduce the interest rate on your loans is to shop around for lower rate credit cards or lines of credit. But always check for a higher interest rates on new purchases, a short or nonexistent grace period, or stiff penalties for late payments – fees can make your good deal a bad one.

You can also probably reduce your interest rate by converting an unsecured loan to a secured loan by consolidating your credit card bills with a home equity line of credit (HELOC) or home equity loan. In addition to a lower interest rate, the interest may be tax-deductible.

We had some of the lowest interest rates in early 1990s, so many people took the opportunity to refinance their home mortgages to reduce their interest charges. It always makes sense to keep an eye on mortgage rates and here in 2009 it’s no different. Keep your eyes peeled.

Furthermore, consider refinancing to lock in a fixed rate if you have a variable-rate mortgage with a high interest cap, if current rates are reasonable, and if you plan to stay put for a while.

Your lender can prepare a break-even analysis for you, showing how many years you have to keep the new mortgage before you recoup your upfront closing costs such as title insurance, attorney’s fees, points, etc. always obtain and study the break-even analysis for any proposed mortgage refinance before you sign to make sure it is worth doing.

Are You Over Your Head In Debt

My California based clients often ask me how they can tell when they are in over their heads. There are two general rules of thumb, depending on whether or not you have a mortgage. If you have a mortgage, you are in over your head if your total monthly debt payments are more than 38% of your monthly income before taxes.

If you are mortgage three, you have more debt than you can manage if your total monthly debt payments are more than 50% of your monthly income before taxes before you start write down your total annual income before taxes.

Many experts believe that you should always try to keep your consumer debt payments to less than 10% of your before tax income, which is much less than the 15% mentioned above. Of course, if you are truly in over your head, you probably do not need percentages or ratios to tell you.

You may be already worrying about your debts, skipping payments on some of your loans or making the absolute minimum payments required, and using up savings or taking credit card advances for things like food and clothing. You may even find that you avoid totaling up your loans or paying attention to what you are spending because you are afraid of the bad news. If you fit this description, the best thing you can do for yourself and your family is to get help right away.

The Importance of Debt Consolidation Loans

One option is to take a debt consolidation loan, which will allow you to combine all you’re non-mortgage loans and make one monthly payment (which is usually less than the total of all your existing loan payments). The disadvantage to these loans is that the repayment period may be much longer than the repayment periods of your current loans, so it is easy to comprise this information and compromise even more of your financial future by stretching out payments for years to come.

Another option is to get in touch with a consumer credit counseling service (800 388 CCCS), which is a nonprofit organization funded by credit card companies to assist individuals who are over-extended.

A trained financial counselor will work with you to structure a repayment schedule you feel comfortable with, and then will notify all your creditors that you are participating in a CCCS repayment program so they will stop hounding you to pay up. The service’s popularity is growing and the number of counseling sessions has multiplied every year since it’s inception.

Try not to be embarrassed because you think your debt situation is the worst the consumer credit counseling service has ever seen. The average client has 10 credit cards, and annual household income of $22,000, and $18,000 worth of debts, which means that many clients have significantly higher debt loads them these averages.

The only disadvantage of using the credit counseling service is that your participation in the program is reported to the credit bureaus, so it may show up on your credit record. But since payments and defaults on loans are also reported, the report that you are using the consumer credit counseling service is certainly the lesser of two evils.