So many Americans are carrying a heavy load of debt on multiple credit cards with high rates of interest on each one of them. There are many offers for quick fixes and promises that by consolidating your debt, your finances will become easier to deal with and more manageable.
When looking into the possibility of taking all of your debt and putting it with one credit card or financing company, there are some questions you should ask yourself. First of all, ask if your overall interest rate will be signifigantly lower.
Also of great importance, look at exactly what your monthly payment will be and if that amount is lower than what you are currently paying on the sum of your multiple credit cards. The ultimate goal for the individual should be to get out of debt faster and become financially solvent.
Try out some hypothetical scenarios. There are some great “what if” calculators online right now that you can use as tools to gauge how long it will take you to get out of debt when paying a certain interest rate on your consolidated debt.
Then, compare that to the period of time it will take you to get to a zero balance with a consolidation plan. If you are looking into a debt consolidation plan and the company you’re dealing with is trying to loan you even more money, of course that will ultimately set you further behind.
Try to deal with only the debt you have already incurred so you can whittle that amount down in a reasonable amount of time. When thinking about consolidation, consider your current income and projected income for the duration of the loan agreement.
You should also ask what many feel is the most important questions about fees and other hidden costs and is there collateral involved. Ensure that if anything unforeseen occurs and you are late on a payment or fall behind, you have not put crucial belongings such as your home or vehicle in jeopardy.
Another thought to entertain is credit counseling through nonprofit sources either before or together with a consolidation of debt program. Organizations like CCCS, Consumer Credit Counseling, and other locally run nonprofit organizations can be excellent resources to give you support and guidance in getting out of the debt you’re in.
An objective financial counselor can help you come up with a budget plan based on your income and your amount of debt. They can help you to remain level headed and focussed to get out of debt. Consolidation of credit card debt can be a good idea if you are dealing with a reputable company and it is part of a well thought out plan to get out of debt and remain there.
It is easier to track and plan for one monthly payment compared to many different payments. You will know if this consolidation offer is right for you if the interest rate is lower and based on your income and financial situation, it is going to be of an overall benefit to you.
If there is any way you can manage to make double payments to pay down your debt, it will get you out of credit trouble so much faster. Possibly, you or your spouse could take on a second job to attain this goal.
A powerful concept that many forget to stay out of dangerous, never ending debt is to live within or below their means. This is a powerful concept, and yet one that many find difficult to stick to with the rising living costs. This sounds like such a simple principle, but it’s one that many of us have difficulty adhering to.
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