Debt Consolidation May Be An Important Resource For Home Business Owners

One of the main reasons that viable and otherwise sound businesses fail is that owners lack financial resources to weather the first difficult months and even years. Starting a freelance or other home-based enterprise can be a lucrative venture, but it is highly unlikely the rewards will roll in early in the game.

Most business advisors recommend that a new business owner sock away enough money to support himself for a year or more before embarking on a business. This does not mean that the business will not take in money, even early on. The usual course of small business is that business starts slowly at first and builds, often in fits and spurts. However, small businesses will have a disproportionate amount of expenses in these first months and years.

You'll be surprised by the expenditures you'll have in the first year; you have to buy all of your equipment, supplies, permits, software, and so on. These seemingly minor items can end up costing you thousands of dollars. Covering those expenses can be tough. Even when a new business starts to earn money, it is not unusual for it to post losses in the early months because necessary expenditures simply outpace earnings.

Besides saving money for the day you start your business, you should also work very hard to reduce your personal expenditures. Anything that can be paid off before you start your business should be paid off. Besides, it will be good practice for the new business owner to practice living more frugally! Most new businesses will take a lot of financial flexibility and learning how to live on less is a great skill that just about every business owner will tell you is important.

If you have debt (and who doesn't,) you may want to consider something known as debt consolidation. Before you get riled up, debt consolidation is not bankruptcy or debt settlement. It's a perfectly legal, ethical way to roll your many small debts together in one package and then negotiate a better loan on the large amount.

The idea behind debt consolidation is that you may be able to restructure (consolidate) your debt in such a way that you will have to pay less interest to pay it off. Debt consolidation won't hurt your credit report. In fact, it could actually improve it! That's because debt consolidation means you get a big loan to pay off your smaller debts.

Paying off a debt usually improves your credit. And if you manage the larger debt consolidation loan well, that will help your credit, too. By the way, a good credit score is essential for a new business owner! But how does it work, In theory, you gather your debts. 5,000 on a department store credit card that charges 22% a year interest.

That may sound exorbitant, but it is not all that unusual. Let's say you have some other loans. 448 a year in interest). Put these three amounts together and add them up. 18,200 that charges just 12% interest. You get that new loan, use it to promptly pay off your three charge cards, and now you pay off the one new loan.

2,184 in interest a year. 964 a year in interest. 80 a month less. 80 and apply it toward the principal. You spend the same exact amount of money, but you will get out of debt significantly faster. That's a small picture of debt consolidation. You can also roll in car notes, student loans, medical bills, and other debts.

Of course, debt consolidation can be tricky. First, it may not work for you-you may owe money but at rates that are already as low as you can get. Second, you might want to get a lower-interest-rate loan but cannot qualify. It helps if you own your own home, but even if you do not, there are other ways to consolidate your debt. If you can consolidate and pay off your debt, you'll have a tremendous business edge, one that is hard to appreciate until you've been in business for a while. About The Author Jo Ann LeQuang has owned and operated her own business for five years in Texas.

So what are the advantages of going through this process, The greatest advantage of settling your debts is that of saving money. Which in turn correlates with the next benefit, which is saving years of time. With the debt settlement process a debtor can expect to save around forty to fifty percent of what is owed, and become free of debts within 2-3 years. When searching for a establishment to employ for debt settlement one should do their research before contacting the company.

To ensure the establishment you will be using is reputable and can get the job worked out the right way. A good spot to start is too check up on the Better Business Bureau, most good standing companies will be registered with the BBB. Another extremely wise measure to take when seeking out a organization to do debt settlement is checking the Attorney General. Many states' Attorney General will list any company that is being investigated. As you can tell any company being investigated will not be a decent company to sign up with.