Friday, October 18, 2019

How to Pay for Addiction Treatment

If you or a loved one has faced addiction, you’re not alone. One in seven Americans will face substance addiction in their lives, according to USA Today. However, only 10% of those people will ever receive treatment.

Addiction is caused by a variety of factors, including genetics, psychological problems, the type of drug, and trauma, among other things. It can build slowly over time and become a chemical craving for the substance.

One of the major barriers to treatment is cost. According to recovery.org, inpatient treatment can cost between $2,000 and $25,000 for a 30-day program. Outpatient treatment can range from free to $10,000, and detox can range from $300 to $800 a day.

Given the high cost of treatment, the idea of paying for rehab can seem overwhelming, but it doesn’t have to be.

The cost to stay addicted is also high. There’s the money required to pay for the substances, along with the incalculable toll addiction takes on one’s body and interpersonal relationships.

Consider these estimations of annual costs of addiction collected by RehabSpot:

  • Alcohol: $4,500+/year
  • Marijuana: $7,000+/year
  • Cocaine: $8,000+/year
  • Heroin: $54,000+/year
  • Prescription Opioids: $3,500 to $70,000+/year

But it’s not just the cost of substances or lost relationships that make addiction so expensive. Health issues caused by addiction can also drive up healthcare costs and raise insurance rates. Moreover, time missed from work, being fired from a job or losing income due to addiction can all take a financial toll.

There’s also the legal costs to factor in, too. A person who is arrested for possession, usage or driving under the influence may also encounter court fees, attorney bills and other financial penalties, along with the longstanding negative impact of having a record in the criminal justice system.

Addiction can cause feelings of a loss of control or helplessness, but there is hope for recovery. Rehab can help people who are addicted to substances overcome the obstacles through services that include detox, counseling, nutritional therapy and relationship building. Rehab does have up front costs, but in the long run, recovery can alleviate future financial burdens, and can be an instrumental way to repair relationships and one’s lifestyle.

The cost of rehab can be expensive, which may discourage those in need of treatment. This doesn’t have to be the case. Those who are facing addiction, and their loved ones, have options to pay for addiction treatment. These range from personal loans to credit cards for bad credit.

Don’t give up hope. Here’s information about how to finance addiction treatment so you or a loved one can get the help that’s needed.

How Much Does Rehab Cost?

Rehab costs are determined by a variety of factors, including the type of substance the rehab is for, the type of facility where rehab is provided (and whether or not the person is living in that facility), amenities and treatment options offered, and more.

Here’s an idea of the overall average cost of rehab:

  • Outpatient Detox: $1,000 to $1,500
  • Inpatient Rehab: Between $6,000 and $20,000 for a 30-day program; between $12,000 to $60,000 for a 60- or 90-day program
  • Outpatient Rehab: Between $5,000 and $10,000 for a 30-day program

On top of the rehab program, a patient may need to pay for certain medications. For example, year-long methadone treatment for heroin users costs around $4,700. Alcohol and opiate addicts may need certain medications for treatment.

In addition to initial rehab costs, patients and families should be aware of the potential for relapse. According to the National Institute on Drug Abuse, “Relapse rates for drugs are similar to rates for other chronic medical illnesses. If people stop following their medical treatment plan, they are likely to relapse.”

The National Institute on Drug Abuse explains that relapse is a normal part of recovery, with relapse rates for substance use disorders ranging from 40-60%. Relapse can be very dangerous and lead to overdose. That is why re-entry to rehab may be a life-or-death situation when a relapse occurs.

When you or a loved one is seeking treatment for addiction, know that relapse is a possibility. Mentally and financially prepare for the recovery process, which may include relapse. One cycle through rehab may or may not be enough.

When someone has undergone addiction treatment, they may also have had to take time off of work, which may reduce their income. It’s important to be aware of financial pitfalls like these when seeking addiction treatment.

The freedom that can be gained from recovery can be worth the cost. Getting help now can alleviate a greater financial and personal burden in the future. There are options.

Factors That Determine Rehab Price

When you’re considering addiction treatment for yourself or a loved one, you’re probably wondering about the costs and what your options are. Here are some factors that may affect the price.

Type of Treatment Offered

Depending on whether treatment is for drugs, alcohol or another substance, the costs may vary. Within drug treatment, treatment for certain types of drugs may differ as well. Treatment centers that offer addiction treatment for more than one substance may also charge differently.

Length of Stay

For patients living in an inpatient facility, the length of stay will affect the addiction treatment cost. Outpatient facility costs will also be influenced by how long the services are used.

Location

The location of the rehab facility will likely influence the cost, due to the cost of living in that state and the compensation for the staff working at the facility. Some treatment centers near desirable locations for patients, like those located near beaches or on horse ranches, may also cost more than suburban or rural treatment centers.

Amenities

The amenities at treatment centers will vary and affect the cost. Some treatment centers offer amenities like spas, horse therapy and yoga studios. Luxury rehab resorts may offer hotel-style living, no chore requirements and single-occupancy rooms, which can also increase costs.

Type of Center

Each center’s organizational model will influence its costs. Some are inpatient, where a patient lives in the treatment facility. Others are outpatient, where a patient lives outside the treatment facility.

Some people who want to recover from addiction may opt to go through a detox process first, which is a supervised program that enables the safe clearing of substances from one’s body. Other rehab models may range from nonprofit to locally owned.

Some treatment centers will offer little-to-no-cost services depending on the population served, such as those that are geared towards military veterans.

Size of Facility

The size of the facility may also influence costs. Typically, smaller facilities will cost more because they offer more personalized service to each treatment patient. Here are some typical rehab costs, according to a 2019 report by Recovery.org:

Type of rehab Costs
Inpatient rehab Basic low-cost, 30-day residential: $2,000-$7,000 and includes counseling, meetings and meals
Standard 30-day residential: $10,000-$20,000 and includes treatment and aftercare planning, gym and yoga, meetings
Premium/luxury 30-day residential: $25,000+ and includes private room, holistic treatments, variety of therapies, outside activities and weekend activities
Outpatient rehab Therapy and counseling: Free-$1,000
Partial hospitalization: Cost depends on medical needs
Intensive outpatient care: $3,000-$10,000
Detox $300-$800/day

Paying for treatment through financing

Most people don’t have access to the full amount of money they need for treatment at the precise moment they need it. However, there are various financing options available. Patients and their families may consider combining several methods to pay for treatment.

Here are some ways to pay for rehab that you might consider.

Credit Cards

Credit cards provide instant access to funds. In some cases, you can also get rewards credit cards that provide spending rewards, including cash rewards, that can help offset rehab costs.

There are also credit cards that are available specifically for medical expenses, like CareCredit. Medical credit cards work just like other types of credit cards, but they may only be able to be used for medical purchases with a single provider.

One of the potential risks of using credit cards is that they can come with a high interest rate or additional fees. If you want to use credit cards to pay for rehab, you’ll want to have a plan in place to make on-time credit card payments so you don’t accrue extra costs from interest.

You may be wondering about how to get credit cards for bad credit. Unsecured credit cards don’t require a down payment and have affordable up front costs, and they may be available to you, even if you aren’t sure you’ll qualify.

Loans

Loans, like credit cards, include interest on the amount of the loan, which must be paid back along with the principal. However, interest rates for loans tend to be lower than those associated with credit cards, so they may be a good alternative for paying treatment costs.

In May 2019, the Federal Reserve reported that the average rate on a credit card that was assessed interest was 15.13%. The average rate on a 24-month personal loan was 10.63%.

A personal loan can get you the cash you need quickly so you or your loved one can enter addiction treatment. You’ll know the exact amount you’ll need to pay back in regular monthly installments. Some loans are unsecured, which means you can qualify based on your credit score and history. With unsecured loans, you don’t have to put up collateral, like a car or home.

There are other types of loans that are offered specifically for addiction treatment, such as those offered by My Treatment Lender. Discuss your options with lenders you’re considering to find the lowest interest rate possible.

Crowdfunding

Crowdfunding websites, which allow communities to financially support a cause, have become popular options for those needing medical treatment. According to Advisory Board, one-third of campaigns on the crowdfunding site GoFundMe are for medical bills.

Here’s how crowdfunding works. You set up a campaign on the website explaining your cause and why you need help with funds. On sites like GoFundMe, you set a goal for how much you want to raise. You keep what is raised, whether you reach the total goal or not.

You can create a video explaining why you’re in need, share updates and progress, and more. For those who need addiction treatment, getting support from friends and family through a crowdfunding site can be a way to get help.

Home Equity Loan

A home equity loan is a way for a borrower to use their home as collateral for the loan. Equity is available when your home’s value is higher than what you owe on your home loan.

Personal loan approval is typically quicker than a home equity loan, but a home equity loan may come with a lower interest rate because your home is being used as collateral. In addition to this benefit, home equity loans may be tax deductible. This type of loan provides a simple way to get a large sum of money quickly.

Be aware, though, that if you live in an area where home prices are declining, taking out a home equity loan may come with risks. If your home’s value declines, your home loan balance, which is what you owe on your loan, may be greater than the home’s value.

It’s best to discuss loan options with a lender to determine the best fit for your unique financial situation.

Other Rehab Payment Options, Including Insurance

You may also be able to pay for addiction treatment using health insurance. Under the Affordable Care Act, all marketplace insurance plans must provide coverage for addiction treatment. Many addiction treatment centers accept various types of insurance for payment.

Veterans who have military insurance, such as Tricare, also have coverage for substance use disorder treatment. Most private insurance plans also cover rehab.

Medicare and Medicaid

Medicare, a federal- and state-funded program, provides insurance for those older than 65 or for people under 65 who have a severe disability. Medicare provides coverage for inpatient rehabilitation care when a doctor certifies that the patient has a medical treatment requiring rehab, medical supervision or coordinated care.

Medicaid, also a federal- and state-funded program, provides health insurance to those with very low income. Under the Affordable Care Act, Medicaid must provide coverage for substance abuse treatment. Patients will need to verify whether the treatment center they’re considering accepts Medicaid.

Government Programs

There are also public-assistance options for substance-abuse treatment. Addicts and family members can call the Substance Abuse and Mental Health Services Administration help line at 1-800-662-HELP (4357) to get recommendations for treatment centers. Callers who have no insurance or who are underinsured will be referred to their state office for state-funded treatment program options.

FreeRehabCenters.org also lists free, sliding scale, low income and payment assisted rehab centers based on state.

How to Rebuild Finances After Rehab

Rehab has up-front expenses, but the results can be life changing and transformative. By overcoming addiction, patients can improve their professional lives, earn more and build a more financially secure future.

Becoming financially stable is one key to a healthy lifestyle, in part because financial stress is linked to health issues. To stay healthy and sober, it’s important to have healthy finances, too. Here are some ways to rebuild finances after rehab.

1. Gain Employment

Find a job where you’re interested in the work and can work the required schedule. You can start earning a paycheck and work toward saving and paying off debt. Working after rehab has other benefits, too.

“Research has shown that working helps people overcome substance abuse and stay sober,” according to an article written by Washington Post reporter Lenny Bernstein. “It provides income and health benefits, of course, but also can instill meaning and purpose in their lives, which are powerful incentives to stay off drugs.”

2. Create a Budget

Determine your fixed expenses, such as rent, transportation, insurance and any debt payments. Aim to put as much of what remains from your income into savings. 

Identify what your unnecessary expenses are, including entertainment. Think of less expensive swaps you can make to save money, or find free ways to have fun. This can help you save more and build up a savings cushion.

Financial experts recommend saving at least three to six months worth of income in case you lose your job. While you’re working toward this goal, try to limit unnecessary spending.

Buy groceries and cook instead of eating out. Head to the library to borrow movies, books and music. Exercise outside instead of at a gym.

3. Automate Your Savings

Look into a savings account that allows you to automatically transfer part of your income into savings. Or, work with your employer to use direct deposit and put a portion of your paycheck into savings.

You can also open an individual retirement account (IRA account) and contribute to that with automatic payments. With that, you may gain tax advantages as you save for retirement.

4. Increase Your Credit score

Your credit score can impact your ability to rent a home, purchase a car, secure a loan and more. You’ll want to raise your score and maintain a good credit rating. You can do so by:

  • Reducing your debt
  • Making outstanding payments on time
  • Avoiding overspending and utilizing too much credit
  • Avoiding applying for credit cards and loans you don’t need

As you make on-time payments and minimize your debt, you should start to see your score increase over time.

There are Addiction Treatment Options Available for any Financial Situation

Don’t let finances prevent you or a loved one from getting the substance abuse treatment that’s needed. It’s never too late to get the help you need. Given that there are credit cards, loans, government programs, insurance and other rehab payment options, there are ways to finance addiction treatment.

If you or a loved one is struggling with addiction, you can start with this list of resources for addiction to find a rehab option that may work for you.

At The Simple Dollar, it’s our mission to help readers like you take control of your finances; we encourage you to learn more financial tips today.

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Home Equity Line of Credit vs Personal Loan

HELOC vs Personal Loan

Coming up with the funding for a major purchase or project can be challenging if you don’t have the cash on-hand. Luckily, personal loans or a home equity line of credit (HELOC) can make financing those large purchases possible.

Deciding between a home equity loan or a personal loan takes some thought, though, since the two options are quite different. Not only are the qualifications different, but there are also certain circumstances that are better suited for each option.To figure out which funding source is right for you, it’s important to understand the differences between a HELOC, home equity loan and a personal loan. Let’s take a look.

What is a HELOC?

In order to qualify for a HELOC, you must be a homeowner and have equity in your property, which means that your home is worth more than you owe on it. With this type of loan, you’ll have access to a revolving credit line that you can draw from if you need it, and you only pay back what you borrow.

Lenders will allow you to borrow up to a certain percentage of your home equity with a HELOC. If, for example, the amount left on your mortgage is $300,000, but your home is valued at $350,000, then your current equity would be $50,000. The typical HELOC loan is for 80% of that amount, which in this case would qualify you for a $40,000 line of credit. That means you’d have ongoing access to $40,000 of credit should you need it, but you can also draw from it for smaller projects in lower increments, too. However, interest rates are variable so if overall rates increase, your payment amount will as well.

What Is a Personal Loan?

A personal loan is typically an unsecured loan that allows you to borrow a lump sum of money without using any of your assets as collateral, though there are times when a personal loan is secured by your property, like your house or car. You pay back the loan by making monthly payments for a predetermined period of time. In addition to repaying the principal balance, each payment will include interest, which is calculated at the rate determined for your loan. Some lenders also charge an origination fee that is deducted from your loan funds before you receive them. Typically, the fee ranges between 1% and 8% of your loan amount.

Both your interest rate and your loan amount are based on the information in your personal loan application. Your lender considers your credit score, income and debt-to-income ratio before extending a loan offer. Online lenders make it quick and easy to apply, and you can get funded within a few days (or sometimes less), which makes personal loans a good option for time-sensitive expenses.

A HELOC isn’t a Home Equity Loan

Be sure that you understand the difference between a home equity line of credit and a home equity loan, though, because there are big differences between the two.

With a HELOC, you gain access to a revolving credit line with a variable interest rate that you draw on as needed, and you only pay interest on the amount you actually use. It’s great for home renovation projects or major events, like a wedding, where a large sum of cash will be necessary.

With a home equity loan, also called a second mortgage, you receive a lump sum just as you would with a personal loan, but you’re using your house as collateral, so interest rates are usually much lower than personal loans. Unlike a HELOC, home equity loans almost always come with fixed rates.

Which Is Better? A Personal Loan or a HELOC?

Choosing between a HELOC and a personal loan will depend on your circumstances. Only homeowners can qualify for a HELOC or a home equity loan, so if you’re not a homeowner you can’t get a HELOC. It’s also important to remember that you’ll be putting your home at risk if you fall behind on your payments. On the other hand, you can save money on interest by taking advantage of competitive HELOC rates.

On the other hand, anyone can apply for a personal loan. The approval process is also usually quicker because you don’t have to confirm your home value, and if you opt for an unsecured loan, the higher interest rate is offset by the fact that none of your personal belongings are used as collateral.

How to Choose a Personal Loan Provider

When comparing personal loan providers, narrow your list by choosing the ones that work with borrowers in your credit profile. This saves you time and avoids adding too many inquiries on your credit report. While personal loans can typically be used for almost any purpose, some lenders do offer certain loans for specific  reasons, such as debt consolidation loans or home improvement loans. You’ll also find that different lenders offer different loan amounts. If you know how much you want to borrow, focus on lenders that work in that range.

Once you’ve narrowed down the list, submit an application to your top choices. Most online lenders respond with an approval and a loan offer within minutes. Compare your options and find the best personal loan to match your budget and timeline.

How to Choose a HELOC Provider

When you want to tap into your home equity to fund a purchase or expense, don’t rush through the vetting process. Take your time to find the best lender and make sure you’re getting the best terms that make sense for you. In addition to comparing interest rates, also look at how long the funding process takes, especially if you need the money by a certain time.

Next, consider how the lender determines the value of your home. Do you have to pay for a third-party appraiser? If so, that could cost a minimum of a few hundred dollars, not to mention take a few weeks to complete from start to finish. Once you have a clear picture of how the process works, you’re ready to start applying.

The Bottom Line

As with any financing decision, it’s smart to weigh all of your options before taking the plunge. Deciding between a HELOC and a personal loan involves weighing two very different structures of funding and repayment.

When exploring a HELOC or home equity loan, you should also pay ongoing attention to your local real estate market before applying and after receiving your funds. If the home prices are trending downward in your market, tread carefully. If you take out a loan against your home in a downward spiraling market, you could end up owing more on your house than it’s worth should you need to sell it. So, make sure to stay on top of how much remaining equity you have, and whether that’s growing or diminishing with current market trends.

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Tesla Car Insurance Review

Interested in affordable car insurance for your Tesla? Tesla Insurance offers comprehensive coverage and claims management support that’s often 20% to 30% lower than other car insurance providers. If you’re a California resident, you’re in luck. You can purchase Tesla insurance for your Model S, X, 3 and Roadster today. Currently, Tesla only offers this insurance to California residents, but they have plans to expand to other states in the near future. The cost of Tesla insurance varies depending on factors like model, year, your driving record, etc. However, the average cost to insure a Tesla is just below $1,000 per year.

The Tesla Insurance Program

Because Tesla understands their vehicle technology, safety and repair costs, they’re able to eliminate fees taken by traditional insurance carriers. Insurance prices reflect Tesla’s safety and advanced driver assistance features, which allows drivers to acquire a reduced insurance cost compared to other providers. Only California residents currently benefit from this insurance, but Tesla plans to expand their offerings across the country to make Tesla insurance more affordable. Tesla offers drivers traditional discounts like good driver discounts and multi-driver discounts but also offers exclusive Tesla discounts for features like autopilot, anti-lock brakes, stability control, an anti-theft system, and more.

Average cost of insuring a Tesla

The average cost of insuring your Tesla will vary depending on insurance carrier, model, your driving record, and more. Here’s is how the average monthly insurance rate for a Tesla S through Tesla’s Insurance program compares to other popular insurance companies:

Company Tesla Model S Monthly Insurance Rate
Progressive $539
Geico $545
State Farm $554
Tesla $436

This chart accurately reflects Tesla’s claim to be 20-30% more affordable compared to other car insurance providers. Because Tesla’s technology continues to improve and become more complex, maintenance and repair fees increase, which makes the cost to repair a Tesla after a collision more expensive compared to other automobiles. Because of this, Tesla aims to make insurance more affordable and easily accessible for their customers.

Average cost of Tesla insurance by model

Tesla Model Average annual insurance cost
Model 3 $1,913
Model X $2,473
Model S $2,963

Why are Teslas so expensive to insure?

The average cost of insurance for Tesla’s different models is relatively high, mainly due to Tesla’s high repair and maintenance costs. There’s a limited number of Tesla-approved body repair shops, and the aluminium body of some of the Tesla models is more expensive compared to traditional steel frames. As Tesla technology continues to grow and become more advanced, repairs become more complicated, time consuming, and expensive. For all of these reasons, even a fender bender can become incredibly expensive for a Tesla driver compared to other automobiles.

Frequently Asked Questions

What is the cheapest and most expensive Tesla model to insure?

The most inexpensive Tesla model to insure is the Model 3 at an average of $1,913 per year. The most expensive model to insure is the Model S 90, Tesla’s highest-end car, at an average of $2,693 per year.

How can I save money on my Tesla insurance?

Whether you’re a California resident purchasing Tesla’s car insurance, or purchasing insurance through another provider, make sure that you’re receiving every discount you’re entitled to. This includes the traditional discounts like good-driver, multi-driver, etc and Tesla specific discounts like stability control and an anti-theft system.

How much will my Tesla insurance policy cost?

You can expect to pay somewhere between $1,900 and $3,000 a year. The price varies on the individual, the model, their driving record, what discounts you qualify for, and other factors. In some instances, you may save more money by bundling your car insurance with your homeowners insurance company. That being said, it’s important to do your research and consider all of your options before deciding on the insurance company that’s right for you as a Tesla owner.

How is Tesla insurance more affordable than other insurance providers?

Because Tesla better understands their vehicles, their technology, and their repair costs, the company is able to eliminate certain fees that other providers include in your traditional yearly insurance fee. In addition, Tesla owners are entitled to Tesla-specific discounts if you are insured through the company. For example, Tesla takes their active safety and advanced driver assistance features into account when pricing policies, which also brings down the price.

How do I purchase Tesla insurance?

Current Tesla owners who live in California can purchase a policy within minutes on the Tesla website. If you’re a brand new Tesla owner, you can request a quote prior to delivery once a VIN number is assigned to your Tesla account.

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Why Debt Consolidation Usually Makes Sense

Recently, I’ve heard from a few readers asking some very general questions about consolidating their student loans. Their questions mostly boil down to the fact that they’ve heard that it’s a good idea, but they don’t really understand why. What’s the benefit of student loan consolidation – or consolidating any loans for that matter? This is a great “personal finance 101” question, the type of question I already answer sometimes for my children and I expect to answer more and more as they migrate into adulthood.

Almost always, the reason you should consolidate is so that the sum total of everything you owe over the lifetime of your loan (or loans) is as low as it can possibly be, and consolidation is often a way to lower that total. The lower the total is, the less you’re paying in interest and the more you’re keeping in your pocket.

You can figure out how much you’re going to owe in total over the course of a loan by multiplying the monthly payment by how many months are left – often this is added up for you on the statement, but you can do it easily yourself with any calculator.

Let’s start off with a straightforward example.

An Example of Consolidation

Let’s say you have two loans.

With Loan A, you still owe $10,000, the interest rate on it is 6%, and you’re going to be making payments for the next 8 years. With Loan A, you’re making payments of $131.41 every month for the next eight years, and over the course of that time, you’re going to pay back your $10,000 along with an extra $2,615.77 in interest.

With Loan B, you still owe $15,000, the interest rate on it is 5.5%, and you’re going to be making payments for the next 7 years. With Loan B, you’re making payments of $215.55 every month for the next seven years, and over the course of that time, you’re going to pay back your $15,000 along with an extra $3,106.25 in interest.

If you don’t consolidate your loans, eight years from now everything will be paid off, but you will have paid your lenders an extra $5,722.02 in interest.

Let’s say that you have an offer to consolidate those loans into a 5 year loan at 4.5% interest. This will result in a monthly payment of $466.08 a month for the next five years, which seems bad at first. After all, with things as they are now, you’re paying a total of $346.96 per month. The lower payment is better, right?

The benefit with the consolidation is that you’re actually paying off your loans three years earlier than you would otherwise. When you hit that 60 month mark with your consolidated loan, it’s done. You’ve paid it off. Better yet, you’ve only paid $2,964.53 in interest!

Here’s another way to look at it. Before consolidation, all of your payments added together would be $25,000 (how much you owe) plus $5,722.02 in interest, for a total of $30,722.02. After consolidation, all of your payments added together would be $25,000 (how much you owe) plus $2,964.53 in interest, for a total of $27,964.53. You save about $2,800 by consolidating in this example, money that stays in your pocket, and all you had to do was consolidate your loans and thus change who you’re writing the check to and how much the check is each month.

It’s worth noting that not all consolidation offers are going to wind up with such obvious benefits as this one. Some consolidation offers are barely beneficial, while others will end up costing you more in the long run.

Here’s how to figure out which is which.

The Decision to Consolidate

The decision to consolidate should come down to two questions, both of which need a “yes” answer from you.

First, will this reduce the total amount of all payments I’ll owe on my debts? If you add up the total of all payments on the debts you’re considering consolidating, the total of all payments on the consolidation needs to be lower than that or it’s not worthwhile.

So, for each loan you have now, take the amount you pay each month and multiply it by the number of payments remaining. Add the total for each loan together.

For the consolidated loan, rely on the quote that you’re given by the lender. Take the amount of your monthly payment and multiply it by the number of payments you’ll have to make. If this number isn’t lower than what you’re already paying, it’s not a good deal.

It is very important here to include all consolidation fees in this calculation. You will sometimes be quoted pure interest rates or payments that don’t include any fees. Make sure you include all payments and fees you will owe in this calculation.

Ideally, you’ll want to aim for the lowest payment total amongst consolidation offers. If you’re going to consolidate, it’s worth getting a few quotes before you do so, and the one that has the lowest total is probably the right one for you.

However, there is a second question that’s quite important: are you able to easily make that new monthly payment? Again, if you’re facing a monthly payment that you can’t easily pay, then consolidation isn’t a good choice.

Often, the offer that gives you the lowest possible total of all payments has some of the highest possible individual payments. That’s because many of the best offers are for a much shorter term. If you consolidate twenty year loans into 10 year loans, or consolidate 10 year loans into 5 year loans, you’re almost always reducing the total amount you owe by quite a bit, but at the same time, you’re almost always raising the monthly payment – you’re just going to be making a lot fewer of those payments.

You need to make sure that if your monthly payment does go up, you can handle it. The advantage, of course, is that you’ll eliminate that loan far faster after consolidation and you’ll pay far less interest and fees in total than you were paying before. In the long run, it’s a good move provided you can handle the monthly payments.

Everyone’s finances are a little different and I can’t universally suggest how much of a monthly loan payment you can handle. You have to assess that for yourself. In general, it’s a poor idea to have your total monthly debt payments and your monthly housing costs exceed 50% of your take home pay. If you’re in that situation, you’re walking a very risky financial tightrope and you should look at moving to a lower cost housing option and hold off on consolidation for now.

What you want to aim for is the lowest total of all monthly payments where you can handle the individual monthly payments. That’s usually the best option for consolidating loans and is probably the option you should go with.

Final Thoughts

Consolidating your loans can be an intimidating option to consider, but the math behind it is really simple. Take each of your current loans and multiply them by the number of payments left, then add those numbers together. Then take the consolidation offer and do the same, making sure you’re including any consolidation fees. Your consolidated loan needs to beat that number, and ideally beat it by a lot.

If your consolidated loan involves a monthly payment you can’t handle, look for other offers or hold off on consolidation for a bit. You’re better off sticking with what you have than moving to a loan where you’re unable to cover the monthly payments.

Most personal finance choices are simple when you boil them down to the basics. You want to pay less interest, because that keeps money in your pocket, and consolidation should be about lowering the interest you’re paying, otherwise there’s no point. Use that as your litmus test and you’ll be fine.

Good luck.

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Govts at three levels responsible to lessen disaster risk: Home Minister

Home Minister Ram Bahadur Thapa during a press conference in Kathmandu, on Tuesday, July 23, 2019.

Kathmandu, October 18

Minister for Home Affairs Ram Bahadur Thapa has said that all three tiers of the government have equal responsibilities in lessening the risk of disasters caused by natural hazards.

Speaking at a seminar organised on the occasion of International Day for Disaster Risk Reduction here in the capital today, Minister Thapa shared that it was a prime task of the governments as Nepal was highly vulnerable to such disasters. He also opined for constructing strong infrastructures with joint efforts from governmental and non-governmental sectors to minimise the risk of disasters.

Speaking at the function, UNDP assistant residential representative Bijay Singh argued that disaster risk reduction tasks should be prioritised to meet the Sustainable Development Goals.

On the occasion, Minister Thapa released a book on disaster management.

The International Day for Disaster Risk Reduction was started in 1989, after a call by the United Nations General Assembly for a day to promote a global culture of risk awareness and disaster reduction.

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Dhanusha court releases lawmaker Sah on general date

File: Lawmaker Pramod Sah

Janakpurdham, October 18

The Dhanusha District Court on Friday released lawmaker Pramod Sah on a general date. He was arrested after he reportedly vandalised a Buddha Air counter at Janakpur Airport on Monday.

A bench of district judge Tej Narayan Paudel released Sah without any bail.

Police in Kathmandu had arrested the Rastriya Janata Party leader from the Tribhuvan International Airport on Tuesday. A case has already been filed against him at the court on the same day. The government has sought a jail sentence from five to 10 years for him as per Section 9(A) of the Civil Aviation Act 1959.

He was elected to the House of Representatives from Sarlahi-1 in the 2017 elections.

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Supreme Court bars elected representatives at local level from receiving pay

File image: Supreme Court of Nepal

Kathmandu, October 18

The Supreme Court has concluded that elected representatives at the local level are not authorised to receive a regular payment from their governments. The apex court says it is unconstitutional and has to be stopped.

The constitutional bench comprising Chief Justice Cholendra Shamsher Rana, Deepak Kumar Karki, Kedar Prasad Chalise, Mira Khadka and Hari Krishna Karki issued the verdict today. The order will affect around 30,000 local leaders including mayors, deputy mayors, ward chairs and ward committee members.

The court says articles 220.8 and 227 of the constitution do not allow the local elected officials to receive the payment.

Six provincial governments except that of Province 1 had already implemented their own laws to provide payments and benefits to the local elected officials.

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