Bill Consolidation Guide

Home Nothing is more frustrating and debilitating financially than to work every month and see your paycheck get gobbled up by bills that don't see to go away, no matter how much or how long you've been paying them. Unfortunately, the American Dream today is replete with bills big and small, eating up valuable cash flow and making people paycheck rich but daily poor. However, with a bit of financial discipline and some fortitude to still muscle through after all the time, money and energy you've already expended, one can get a hold on his bills with discipline and bill consolidation. Definition, Differences from Debt Consolidation When you hear about bill consolidation, most people think of TV infomercials and debt consolidation. Bill consolidation is a bit different. Where debt consolidation programs tend to mainly focus on long-term debt, credit cards, and loans, bill consolidation focuses on getting a better handle on your monthly cash flow. Both can happen simultaneously, but it is important to understand there is a difference. Unfortunately, the terms get mixed up by an onslaught of marketing, advertising, financial companies hungry for business in lending subprime loans, and a lack of financial education among many people. Bill consolidation does use many of the same approaches as debt consolidation. For instance, the snowball payment method works well to a point when reducing bills that have aggregate balances. Trimming down monthly expenses is also a practices shared by both programs. However, where debt consolidation if successfully followed will eliminate debt, bill consolidation manages various ongoing bills to make their timing work better with your income and paycheck. Cash Flow One aspect to really get a handle on personally when starting up bill consolidation is to understand your cash flow. Personal cash flow involves every bit of money you regularly receive on a monthly or bi- weekly basis. While people do also get gifts, oddball cash from a garage sale or some personal liquidation, winnings from a contest or gambling, these one-time pots of cash don't count in your cash flow. They can help with a method we'll discuss later, but for cash flow purposes only your regular income sources should be considered. Adding up the regular income amounts is critical. Every source of regular pay, income, wages, or support you receive adds to the cash flow pot. It helps to put these on a piece of paper with a calculator or on a spreadsheet program. Once you have all the items, then you add them together and get a total. That total is your aggregate cash flow for the month. This is the amount of your budget that is available for you to spend. If you get a raise or take on a second job or income source, then the cash flow increases. If you lose a job, lose an income source, or you suffer a pay cut, then the cash flow decreases. It's important to remember this concept both for managing your regular household budget as well as for bill consolidation. To determine your spending against your cash flow, you use the same paper and calculator or spreadsheet method with all your regular expenses. Add in all your bills, whether they are for regular services, basic living such as food or gas, or for debt payments. The total of this pile of numbers is your monthly or bi-weekly expense. This is the amount of money you currently spend against your incoming cash flow. When the amount of your expenses exceeds how much income you bring in the month or two weeks, then there's a problem. The money has to come from somewhere to make up the difference. People basically have a choice of spending from savings, getting an additional job to add more income, or borrowing money to pay the excess costs. Most people, unfortunately, tend to opt for the third choice because credit cards are easily available, easy to get, and easy to forget about temporarily. When both the credit card bills, loan bills, and regular bills pile up and get bigger and bigger, then the person has a problem. His expenses are far bigger than money coming in, which creates a never-ending spiral effect. No matter how much money gets afforded to bills, the person can't seem to catch up.

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