How to save money while consolidating your debts?
What to do when you wake up to find yourself under a pile of unpaid utility bills and credit card debts? Do you just give up everything and start living like a hermit? Well, that’s one way but that’s definitely not the solution to your money woes. If your unpaid dues are keeping you up at night, debt consolidation is a good way to restructure your finances.
Will that make your situation better?
Debt consolidation means merging all bills and unpaid debts. You can take out a new loan to pay off all your debts at one go. A debt consolidation loan usually has a much lower interest rate and a longer repayment term. This makes paying the new installations a lot easier on your pockets.
Debt consolidation loans only work if the new payment is lower than the total amount you were paying per month. Sometimes, people miscalculate the new payments because the APRs are usually lower. What you must remember is the loan amount is also much bigger. So use a consolidation loan calculator to check the actual amount you will have to pay each month before you make a new commitment.
Goals of refinancing –
Sometimes, debt consolidation is not the answer for your financial troubles. You should only opt for refinancing and debt consolidation loans if the new loan fulfils the following criteria –
- They new payment is lower and it will help you make money
- You will be able to pay off the new monthly amounts with ease
- You will have some money left after paying off all your existing loans to start afresh
- It will not create a massive dent on your credit score
You have to be very careful while starting with debt consolidation. There are quite a few “fake” companies will cause your finances more harm. Always compare top debt sites before you reach out to them.
Don’t neglect debt counseling –
You cannot manage your debt properly without identifying the problem areas. If you want to save up and at the same time pay off all your creditors, you will need expert advice. Most online debt companies like nationaldebtrelief have debt counseling facilities. This will help you identify the problem areas.
Sometimes the problems are as simple as overspending on shopping or entertainment. Debts are a result of habit. Debt counseling will help you face your troubles and make sure that you can develop new, more constructive habits that will help you save.
We have seen, going for debt counseling is especially rewarding for those who are currently in credit card debt because of unchecked shopping habits. Debt consolidation loans do not usually help them since it provides them another reason to binge. With counseling, they can check their trouble-causing habits. Debt counseling from the right professional can help you save and live a more relaxed life while on a new loan.
Debt consolidation loan may seem like a quick fix but it’s only a temporary solution. Unless you are ready to restructure your habits, restructuring your loans will hardly help your personal finances.