Sometimes we have so many little bills lying around that we lose track of them, and before we know it we are paying late fee after the late fees. It’s not always that we don’t have the money to pay them on time. It’s just that we are living life in the fast lane, and things get away from us. When you have more than a few monthly bills, sometimes it is in your best interest to consolidate them under one loan, and then you only have one monthly payment to worry about.

There are several ways to go about consolidating your debt, but the most common way is a home equity loan. Many people have been paying on their home long enough to have established some equity in it. Basically, the longer you have been paying on your mortgage, the more you have been paying toward the principle. Looking at it in other terms, let’s say that you own a home that has been valued at $175,000. You have an existing mortgage that the principle still owed is $92,000. Lenders use a specific formula known as the ‘loan to value’ calculator to see how much they will lend you.

So, using those figures, the house is worth $175,000, but you have $83,000 in equity. That doesn’t mean the lender will loan you that much money. They use the LTV ratio on the value of the home. The amount they use is usually 80%. It would calculate as $175,000 x .80 = $140,000. That is the total amount that can be loaned on your home. However, you already owe $92,000 so the most you can borrow is $140,000 minus the $92,000 that is owed, which leaves $48,000 that can be borrowed against the equity in your home. Why lenders use those percentages is another story altogether. Just know that those are the current percentages that are used in calculating equity. It is an industry wide standard.

Unfortunately, there are a lot of other issues you need to consider. For instance, what is the percentage rate you will be paying on your home equity loan, also referred to as a second mortgage? If it is going to be higher than the interest you are currently paying on those smaller debts you want to pay off, it might not be in your best interest to take out a new loan. Then again, if you are constantly paying late fees because you can’t keep a handle on all those bills, then you could actually be saving money in the long run. Weigh your options carefully so that you don’t compound your debt any more than necessary. Once you have managed all your debt, it would be easier for you to plan to earn some extra income like putting up a small business. There are government grants for small businesses available that you can take advantage. So prior to your debt consolidation, it is advisable to handle all your bills in order to keep you on the right track. In the future, you may plan to pursue in getting a higher education and college grants for women can provide you with all the financing that you need.