Does Debt Consolidation Really Work?

The truths and myths of debt consolidation leave many scratching their head and wondering, does debt consolidation really work? Several vantage points provide varying perspectives on the issue, including the perspective that debt consolidation does not really treat the problem, but only temporarily relieves the symptom. Let’s take a look at a few statistics.

It is reported that a member of a known debt consolidation firm reviewed his internal statistics and revealed that 78% of individuals re-accumulated their debt after debt consolidation. Now, they’ve just compounded their debt! And that’s not the worst of it; you actually end up paying more interest in the long run through a debt consolidation than without. But hang on, we’ll get to that in a minute.

So why does debt consolidation seem so appealing? It’s simple, because firms are throwing lower interest rates and lower payment options your way. It sounds like a win-win scenario. However, upon further review (and reading the small print), you’ll see that the lower interest rates and lower payments are actually the result of an extended term in most cases. So while you are seemingly saving money through a lower payment, you are actually in debt for a longer period of time and, ironically, accumulating more in owed interest to the debt consolidation firm than your original creditors.

Here’s an example:

Setting up the scenario: Let’s say you have a total unsecured debt of $30,000, which is comprised of a two-year loan for $10,000 at a 12% interest rate and a four-year loan for $20,000 with an interest rate of 10%. Looking at these numbers, you recognize that you owe $30,000 to your creditors and your payments include a monthly payment of $517 to the first loan and $583 to the second loan. Add that together and you’re paying $1,100 a month toward your $30,000 debt.

What debt consolidation offers: In this example, we’ve determined that you’re paying $1,100 each month to pay off your debt. A debt consolidation firm now tells you that you can roll your debt into one loan with a lower payment and a lower interest rate. The debt consolidation firm now tells you that instead of paying $1,100 a month, you can pay $640 per month at a 9% interest rate. At first glance, it sounds like the numbers are amazingly in your favor! Why wouldn’t you jump on this? Well, let’s do the math.

The conclusion: Now that you’ve been given this offer, you realize the debt consolidation firm has your consolidated loan at a six-year term (no longer two or four years). With a six-year term, you will now pay $46,080 on your original $30,000 unsecured debt. Had you not consolidated and continued paying your original loans, your total payoff would have been $40,392. Plus, you would’ve been out of debt two years sooner! By consolidating your debt, you just paid $5,688 more than you would have originally paid.

So, does debt consolidation really work? Are there better alternatives available to provide debt relief? Contacting a debt relief lawyer or bankruptcy lawyer can offer insight into the options available to you and your struggling financial situation to help determine what will work best. If you’re located in New York state, learn more by talking to a bankruptcy lawyer.

Should I Sign My Severance Agreement?

So you’ve been offered a severance package from your employer and New Jersey labor laws have you running in circles – what do you do? The first step in a severance agreement process is understanding why companies offer severance in the first place.

Employers Protect Themselves

So why are severance packages offered? According to research, companies feel offering a severance package is the best option for avoiding future lawsuits, it ‘looks good’ on paper when attracting new talent, and ‘makes nice’ with the former employee who could potentially become a future customer.

Now that you understand the reasoning behind your company offering a severance package, you understand that it is not necessarily your best interest they have at heart. With that said, if you’re not looking out for number one, who is?

You Should Look to Protect Your Own Interests

Don’t attempt to take on New Jersey’s labor laws or severance laws by yourself. Find a good New Jersey employment law firm which specializes in severance cases and set up a consultation.

Meanwhile, here are some basic tips you can follow if you are offered a severance package by your employer:

  • Take your time. Severance agreements are critical, so be sure you take the time to fully analyze what has been offered.
  • Research. Start gathering information to determine if you have room to negotiate. Start with your original employment offer, documentation of your salary, your employee handbook, and other relevant information like bonus plans, health, life and disability insurance, vacation time, and stock options. Make a list of existing benefits and sources of compensation you have, such as commissions, stock, bonuses, etc. You may even have business expenses that have not been reimbursed.
  • Review, review, review. Thoroughly examine the severance agreement to see if they have left out compensation sources, insurance or other benefits. Then do a comparison to industry standards.

Severance Negotiation

Examine why you were fired. Wrongful termination may be grounds to pursue legal action. Questionable motives may help you negotiate your severance package better. Remember, if you sign the severance agreement without legal counsel or negotiation, you could be signing away your rights forever.

Negotiate, or not. Oftentimes, negotiations are expected in severance matters; however, there are some employers who will remove their severance offer from the table if it is rejected. Take careful consideration of what has been offered. Once you’ve decided to negotiate your severance package, you must now focus on exactly what to negotiate. This includes monetary considerations, insurance considerations, disability benefits, letters of recommendation or voluntary separation, and more. Speaking to an attorney from a New Jersey employment law firm will further expand upon these options.

Severance Attorneys

Hire a severance attorney specialist. You know what they say about, “When in doubt…” Don’t negotiate with your employer by yourself. Disputing a severance package or even understanding the severance agreement that is put before you is a big deal. Hire a severance lawyer to review your severance offer and/or negotiate on your behalf . The financial implications of a severance matter are significant and should not go unrecognized.

Signs Your Marriage is Headed For Divorce

In October of 2012, The Huffington Post shared six signs that your marriage is headed for divorce thanks to Leslie Petruk of YourTango.com. So how do you know if your marriage is headed for Splitsville?

  1. If conversations between you and your spouse start out bad, it’s never a good sign. Using criticism, sarcasm, or insults in the beginning will almost guarantee an ugly end to the exchange.
  2. Four particular behaviors – contempt, criticism, stonewalling, and defensiveness – are significant identifiers for potential divorce. When you deliberately try to hurt your spouse’s feelings or criticize them, chances are that your spouse will response by becoming defensive or even shutting you out completely. None of these behavior are constructive communication strategies.
  3. An overwhelming amount of negativity in any relationship is bad. Constantly putting your partner down, judging their actions, badgering them, etc. may cause your spouse to resent you.
  4. The effects that these types of behaviors have on individuals bring about changes in the human body, referred to as the ‘fight or flight response.’ As a result, it becomes increasingly difficult to resolve the situation amicably.
  5. The ability to resolve your conflicts is important to you and your spouse’s relationship. Couples need to be able to disagree or fight, talk about the problem, and move past it. Without resolution, spouses may hold grudges and/or internalize feelings that surface later.
  6. Viewing your marriage in a negative light will only increase the likelihood that the disappointment will come to fruition. A marriage should be a healthy, positive, and stable bond between two people. So you should think of yours that way.

Do you and your spouse fall into this pattern of emotional abuse? Does your relationship suffer from destructive interactions? If so, you may be headed for a divorce.