A life filled with debt is stressful because you never get peace with creditors and debt collectors running after you. As much as you want to pretend that debt doesn’t exist, collectors come to haunt you in the mail, via text, or on your phone. Debt consolidation may just be the answer to this predicament because it lumps your multiple debt into one single, low-interest loan, which also gives you ample time to pay it off. How do you know when this is the right choice? Read below to find out when to consider a consolidation loan.
Quash Those Headaches from Too Many Debts
If you have excessive debts like a mortgage, car loans, student loans, and credit card debt, and you’re having a difficult time paying it off, a consolidation loan is a good option for you. Brice Capital, a private funding firm that specializes in debt consolidation, mentioned that consolidating multiple loans into a single, lower-interest payment plan makes it easier for you to pay all your debt off. Keep in mind that your debt can be significant but it must still be manageable for you, so your consolidation loan can be effective.
Banish Confusion from Multiple Billing Cycles
Having numerous loans mean you also have to keep track of all the details like payment due dates, varied interest rates, companies owed, and methods of payment (ex. check, auto-debit, on-site). Consolidating these multiple sources of debt into one single loan option makes your financial life more organized. One loan translates to one due date, making the task of tracking the monthly premiums easier. Now, you have no more excuse for forgetting to settle that monthly loan payment.
Benefit from Zero Percent or Low Interest Options
If your credit score is decent enough to warrant a zero percent credit card, then by all means take that chance to consolidate all your loans. Hopefully the zero percent installment payment plan lasts for two years or more. Sometimes, there are low-interest debt consolidation loans offered by banks, which are much better than the higher interest rates you pay with your numerous credit cards. Using this option minimizes the accrued interest over time.
Access to Proper Cash Flow
Choosing to get a consolidation loan is a smart move, but make sure you have access to sufficient cash flow. Brice Capital, a leading finance institution, noted that private lenders are more than willing to work out debt consolidation terms with their clients. Most importantly, work on having access to a steady flow of income, which can consistently cover your monthly debt payments and other expenses. Consolidation will likely reduce what you owe, but it won’t make your debts disappear on their own.
Resolve to Break Free from Debt
When you have firmed up your resolve to break free from the vicious cycle of debt, it is time to consider a consolidation loan. If you are still stuck with your old money-wasting ways and bad spending habits, then no amount of financial intervention can help bail you out. Make a financial get-out-of-debt plan and stick to it no matter what happens. This can be as simple as limiting yourself to one credit card or choosing to consolidate all outstanding debt in one account.
In conclusion, you have to be mindful that you’re cutting expenses, altering your lifestyle, and hiding those credit cards away to make a significant improvement on your financial health. Success with consolidation requires a firm resolution to never rack up more debt until you have fully paid for existing ones. Having self-control, being determined, and possessing a strong sense of responsibility to follow through with your financial plans are all critical components to help you break the vicious debt cycle and be able to live financially free.
Leave a Reply