The following is a guest post by Jason Holmes from Debt Consolidation Care who writes about debt related topics including debt settlement, debt consolidation, credit card debt, and loans.

If you have piled up some debt and want to get out of it by the end of 2011, then you can try out debt consolidation by either enrolling in a debt consolidation program or taking out a personal loan to consolidate your debts. Read on to know about these to options to consolidate and pay off your debts by the end of 2011.

Consolidate your debt through consolidation program

One option is to enroll in a consolidation program. There are various debt consolidation companies in the nation that offer effective and honest programs. But your job will be to find out a reputable debt consolidation company that has been in the industry for several years. You can get all the necessary information about the company from the BBB’s (Better Business Bureau) website. You should also get to know about the services of the company from its existing customers. Once, you have gathered all the relevant information about a particular debt consolidation company, contact the company representatives as soon as possible.

Before meeting the representatives/counselors at the company, it is always better to make a complete list of existing debts and calculate the total outstanding balance. You can get detail information about your debts and creditors from the credit reports. So, pull your credit reports as early as possible. It is also necessary to calculate your monthly income and expenses prior to approaching a debt consolidation company.

Since you want to consolidate your debt by the end of 2011, it is better to inform the representatives/counselors of this goal beforehand. The reason is, the counselors will then draw up such a payment plan that can help you pay off the debt in the next 12-14 months. However, make sure you get help from a company that charge minimum fees for their services. This will make it easier for you to pay off the debt. If you find that a particular company is charging an exorbitant fee, then don’t hesitate to move on. Chances are, they're just in it to make a buck off of you.

The counselors at the company will analyze your financial situation (total debt, income, expenses) when you have enrolled in the consolidation program. They will then get in touch with your creditors and inform them that you have enrolled in the consolidation program. The counselors will negotiate with your creditors to waive off the late fees and reduce the interest rates of the loans. Once the creditors agree with the company to cut back the interest rates and you consent to the payment plan offered by the counselors, sign the necessary documents. After signing the documents, you’ll only have to make one monthly payment to the company. The company will forward the money to your creditors after deducting their fees.

Since you want to consolidate your debts within 2011, it is important to make some extra payments. It is not an easy task to consolidate debts within 12-14 months. You have to work hard for it. Making extra payments to the consolidation company may help you get out of debt within the stipulated period. Here are 2 tips that can help you make some extra payments:

1. Stick to a strict budget: Make an effective budget on your own or with the help of online budget planner and stick to it. Track your monthly income and expenses. Curtail all the unnecessary expenses. Find interesting ways to reduce utility bills, water bills, etc.
2. Earn more: Search for the ways to earn more money. Try out alternative investments, stock trading, blogging, writing articles for various websites, freelancing, part-time jobs. You can even ask your family members to try out new ways to earn a substantial amount every month. This will surely help you bring some extra cash in your home.  However, make sure you understand the risks before jumping into any new endeavor, and always have a cap for any potential losses.

Make sure you utilize all the extra cash towards the payment of debts. Otherwise, your aim of consolidating debt by the end of 2011 will only remain a dream.

Consolidate your debt through consolidation loan

Debt consolidation loan can also help you consolidate your debts by the end of 2011. All you need to do is find an economically stable financial institution (bank or credit union) that offers consolidation loan at low interest. Start by researching for interest rates at banks (on sites like BankRate.com) that are located in your area of residence offering personal or collateral-based loans that can be used for debt consolidation.

If your credit history is in good shape, peer-to-peer personal loans are becoming the norm for paying off debt, allowing the borrower to consolidate debt and pay it off at lower rates than typically found at a bank. Peer-to-peer personal loans are also easy to apply and fully online.  A peer-to-peer consolidation loan helps you pay off your debts to your creditors all at once and only deal with one monthly payment.

Usually, the interest rates of these consolidation loans are much lower than that of the credit cards. The debtors only need to make single or one monthly payment to the financial institution. There is no need to manage several or multiple bills anymore. Thereby, debtors can repay the loans easily and sleep peacefully.

However, there are some financial institutions that charge extremely high interest rates on the loans. This specially happens with the debtors with bad credit. So, if you have bad credit, take necessary steps to repair it. However, if they are charging high interest rates in spite of having good credit, then move on. It is also important to not get trapped into easy loan scams. There are financial institutions that offer consolidation loans at very low interest rates. But they stretch out the repayment plan period, which means you end up paying more in the long run.

Before taking out a consolidation loan, make sure you calculate the total cost of the consolidation loan. This should include loan amount, payment plan period, processing fees, late payment fees, documentation charges, pre-payment penalty and interest rates. You can calculate the total cost of the loan with the help of a debt consolidation calculator accurately.

Finally, if you want to repay the loan by the end of 2011, take necessary steps to increase your income so as to pay more than the minimum. Restrict your over spending habits. Never make the mistake of making late payments. If you do so, it will be difficult for you to repay the debt within the next 14 months

Image credits:
Debt Consolidation ad, Circa 1948,  courtesy of Orin Zebest.
Credit cards and cash, courtesy of Anthrocopy.

Next week, we'll be hosting a fantastic opportunity to connect with the Lending Club team and learn more about peer investing.

On Thursday, join Patrick Gannon, SVP Investor Services and myself, Sr. Marketing Director to discuss recent and upcoming developments at Lending Club.  Topics will include diversification, the importance of stable returns, loan recovery rates, investment strategies and more. There will be ample time for Q&As following a short presentation.  This session is recommended for new investors, as well as existing investors who want to fine tune their investment strategy.

Don't miss it!

WebCast: Investor Forum
Thursday, November 18^th
4:00-5:00 pm PT
Register Now >>

A recent study by The Financial Brand shows that quite a lot of banks are trying to leverage social media: 46.4% of them are on Facebook, 34.6% are on Twitter, and 18% of them have an active blog.  However, a presence in social media doesn’t necessarily mean success in this new and exciting emerging medium, and some of these banks are second-guessing their forays into social marketing.

Entering social media with a poor strategy can only lead to disastrous results. Take Bank of America, for example, that took down its blog redirecting people to their main website after failing to engage their customers and industry leaders in a meaningful way.  And how about Chase Bank, whose name consistently comes up in hate tweets, and does not seem to get a break on a simple sentiment analysis.  Instead of talking back and engaging its customers, Chase Bank’s twitter presence @ChaseBank was mysteriously closed down.

The main problem with most social media initiatives taken by big banks is that they lack the long term support from upper management while trying to accomplish too much.  There are simply too many things most banks hope to achieve through a social online presence, and many reasons why, by and large, their efforts are failing.

Here are some common problems banks should address in their social media strategy:

1. Banks Try to Build Community but Their Content is BO-RING!
One of the main motivations for businesses across the world to go online is to bring their customers together. Banks, too, want to form a tribe of loyal, dedicated followers who will choose their services over others every time. But it’s hard to do that with the boring, generic content that most banks have on their blogs and that they post to other social networking sites.

It’s not enough for a bank to have a blog if they don’t come up with compelling, relevant content for it. No one is going to read the blog, let alone become a loyal fan of the bank, if the articles don’t provide new information, or at least a new perspective on some banking issue. Even worse are the bank blogs where content is copied from some other source. That’s badly done, indeed!

2. Banks Try to Market Themselves but Their Site is Ugly
Banks also want to find new customers via their social networking efforts. They don’t just want their current customers to become loyal fans, but they want to convert people who use other banks to their brand. It’s hard to do this, though, when they create sites that people won’t choose to stay on any longer than they have to.

Between making terrible choices in background and color schemes to making blogs that are hard to find and even more difficult to navigate, many banks might actually be turning customers away though their social media efforts instead of drawing them in. When a new potential customer sees a blog that hurts his eyes or is hard to get around (if he can even find it in the first place!), he’s less likely to utilize the bank, not more.

3. Banks Try to Serve Their Customers, Who Don’t Even Know the Bank is Online
Banks usually have good intentions behind their blogging endeavors. They want to better serve their customer base. Since they know many of their customers are online, they try to go where those people can find them. However, most banks fail to successfully promote their blogs or other social networking efforts, so no one even knows that they have the option of getting help online.

Just a quick test to prove my point: look at the images below.  How many of these social media initiatives by a financial services institution are you aware of?  If you recognize more than 2, I'll be surprised.

One of my favorite bank blogs is INGDirect's We The Savers, packed with fantastic content aimed at helping account holders to build up their savings.  However, all that fantastic content goes mostly unread: INGDirect has failed to cultivate followers and traffic, with a paltry 2k average monthly visitors out of the nearly 2.5 million unique visitors they get on their main banking site.

A clear exception to this problem is Chase's Facebook Community Giving charity campaign, that was backed up by a formidable PR and communications plan that helped them get more than 2.5 million people to follow them on Facebook.

4. Banks Try to be Transparent but Have No Strategy or Permission
Many banks hope that their blogs and other places of social media presence are places where they can get real with their customers, where they can say what’s on their minds and talk about why they operate the way they do. This can be a Catch-22, though, if customers refuse to be pacified when they don’t get the answers or the information they want. Without a well-developed strategy for answering customers’ questions and dealing with their dissatisfaction, being transparent can add to a bank’s risk instead of eliminating it.

Also, being transparent and totally honest many times collide with the complicated and sensitive regulatory guidelines they have to follow.  Don't believe me? Ask any bank lawyer what they think of social media.  Or simply check out the amount of disclaimers on Citi's twitter page.  Really, you can't but laugh.

5. Banks Try to Find Out What Their Customers Want but Are Slow to Respond
A lot of banks want the people connected to them via social media to share their opinions. They want to know which products their customers want, what decisions they can make to improve consumer relations, and even what they’re doing that annoys people.

Unfortunately, sometimes banks aren’t actually willing or able to do what their customers suggest, so the strategy backfires. They don’t seem to understand that they need to be willing to implement some customer suggestions, even if they’re not in the bank’s best interests. Otherwise, people won’t come back to the blog, won’t become fans, and won’t be those loyal members of the tribe.

Or worse: they will probably make their own youtube video to catch your attention, like Rockerchic4God did when she declared debtor's revolt after Bank of America raised her credit card rate to 30% APR without notice or apparent reason:

6. Banks Do Not Understand Community Engagement
Let's face it: most of banks are led by a previous generation of management workforce, one that is used to think of customer interactions as transactions.  And It's hard to blame them, since a bank is, first and foremost, a guardian of money transactions.  The problem is that the new generation of customers puts experience over features and sometimes convenience.  Social media exacerbates the issue by giving this new generation the tools and outlets to engage and interact with their favorite brands, services and products.   But are banks ready to engage as well?

Another trend that seems to be working for big companies is to put a face to the organization.  A small number of bank personalities have ventured themselves into social media with full thrust, such as June Walbert from USAA, whose twitter presence serves as a direct connection to customers of USAA, or Peter Aceto, CEO of ING Direct in Canada, who engages customers, associates, and partners via his twitter stream or his INGDirect branded personal blog, properly entitled "Direct Talk $$$".

And it is not just about engaging customers, how about bank employees?  Deutsche Bank recently jump-started an initiative to use social media to unite employees.

7. Innovation Is Just Not Coming From Existing Banks
When was the last time banks introduced some game-changing technology or innovative product?  Many people argue the ATM is probably the last significant innovation from banks... and that was in 1969!   Companies like Mint, LendingClub, SmartyPig, and CreditKarma are all very innovative takes on traditional financial products.   Stock picking communities, person-to-person lending, personal finance management and even credit score management tools, have emerged to serve the changing needs of customers exclusively served by traditional banks.

But what do these innovative companies have in common?  For starters, they all started outside of the traditional banking system, filling the void.  But the more interesting part is that their growth is in part due to how they have seamlessly integrated social media and networking into their products and communication strategies.

Bonus: Banks Don’t Understand How Social Media Works

To be fair, social media is friggin' hard. The emerging social media revolution is just starting, and there is an explosion of platforms and outlets that make it confusing and costly (at best) to create an integrated social media strategy.  This makes is even more confusing to the bank's marketing head sitting in his/her 26th floor corner office in the financial center.   Even the social media gurus are figuring it out as we go along:  Brian Solis and Jesse Thomas have tried, repeatedly, to visualize and explain the social media landscape to glass-eyed top management figures while Celent's Jacob Jegher has put a good effort to demystify social media to banker types.   Establishing, managing and fostering conversations over social media takes time and dedication.

Social Media Landscape by @briansolis @jess3

What has been your experience when dealing with a bank’s social media presence?  Do you think they can survive the paradigm shift in customer engagement, or should they focus their marketing budgets elsewhere?

@RobGarciaSJ

If you want to effectively manage your credit score, it helps to know your FICO score.  FICO is a measure of your credit habits using a formula from Fair Isaac Corporation. Other entities offer their own versions of a credit scores, including the credit agencies and even your lender. Many others who are interested in discovering your level of fiscal responsibility at a glance use variations of the FICO formula to come up with a score. These subtle differences, plus the differences in information reported by different agencies, accounts for the reason that you may end up with more than one score.

The key to ensuring that your score is generally positive is learning how to manage your FICO score. Understanding some of the basics of the FICO scoring system can help you make better financial decisions, and determine in what areas of your financial picture you need to improve.

Main Elements that Contribute to Your FICO Score

When figuring your FICO score, Fair Isaac relies on information about your credit habits, as reported by the major credit bureaus. Here are the five main elements of a FICO score:

1. Payment History (35%): This is the most important aspect of your score. This is the meat of your credit habits, reflecting whether or not you pay on time. If you miss payments, or pay late regularly, your FICO score will reflect that, and warn lenders that you might be a credit risk.

2. Credit Utilization (30%): The next important factor is how much of your available credit you are using. If your credit card balances are close to the limit, your score will be negatively impacted. You can improve your score by paying down debt so that there is more space between what is available to you and what you owe.

3. Length of History (15%): In order to have a credit score, you have to have used credit. A long history of credit use can be an indication that you understand how to use credit responsibly. This factor is one of the reasons that many financial experts recommend that you keep your oldest credit card account active – it positively influences the history part of your FICO score.

4. Types of Credit You Have (10%): The kind of credit you have does matter. The FICO score formula takes into account your mix of installment and revolving loans. Payday loans count against you, and department store credit cards are not as positive as cards issued by major banks.

5. Credit Inquiries (10%): The final 10% of the formula considers how much credit you are applying for. Applying for a great deal of credit in a short period of time can negatively impact your score.

Once you understand what goes into your FICO score, you can adjust your habits to better manage your credit score.

Keeping Tabs on Your Credit Score

Check your credit score regularly to get an idea of where you are. This is especially important if you plan to apply for a mortgage in the near future, since your FICO score is one of the most important factors in whether or not you qualify, and the terms that you end up with. Here are some ways to keep track of your credit score:

• CreditReport.com: You can monitor and track your credit score from all 3 bureaus (Equifax, TransUnion and Experian) practically real time.  They offer a 7-day free trial, but after that there is a monthly fee.
• MyFICO: You can go to the source and pay for a one-time score and report, or you can sign up for regular access for a monthly fee.
• CreditKarma: This site allows you to keep track of your TransUnion score for free. Realize that it might differ from your official FICO score, though.
• Quizzle: You can see your Experian credit score for free at this site. As with CreditKarma, it will probably differ from your FICO score.
• Credit Bureaus: You can straight to the bureaus, Equifax, TransUnion and Experian, to see the scores from those bureaus. You can pay for your scores separately or as part of a report, or sign up for regular access through a monthly fee.
• Identity Protection Services: These services often include credit score access as part of their monthly fees.

Do you know your score?   Or places to help you track it better?  Drop us a comment below.

Lending Club's team will be at Canaan Partners' Web After Dark: the official Web 2.0 Summit opening night party.

Web After Dark is a very exclusive event that takes place once a year and gathers the best and most innovative Web 2.0 startups from Silicon Valley and beyond.

This year, it’s all happening at The Bentley Reserve, right in the heart of the financial district in San Francisco.  Such a suitable location: the classic style of the financial district's most distinguished building will host the innovative and paradigm-breaking Lending Club.

On24, Blip.TV, LiveU, Plixi, Zoosk, Zuberance and several other Canaan portfolio companies will be in attendance.

If you are attending the Web 2.0 Summit, and want to meet the Lending Club team at this private event, please contact Lending Club's investor services team, or myself directly for an invitation.

See you there!

@RobGarciaSJ