People have a negative connotation when it comes to debts. However, debts can help people pursue bigger dreams and major financial decisions like purchasing or financing their dream home. For example, My Loan Solution offers loans for those who are looking to finance their wedding, childbirth, or for a major surgical operation. People acquire loans for different reasons.
Then again, the negative outlook on debt comes from people who owe too much debt. Debt can change your life — and its results can either be fortunate or disastrous. The key with debt is that you must have the ability to stay on top of it; it is a responsibility you have to maintain. A series of failing to ease off your debt will only result into more debts, locking you into a chain of endless payments and loaning.
The good thing is, there are many ways to pay off your debt. Americans have an average of $132,500 in debt. That does not stem from one debt alone; with that huge amount of debt average, it comes from different kinds of debts that someone had acquired in his life.
One of the common strategies in managing and paying off debts is consolidating your debts. There are many ways to pay off your debt through consolidation:
- Adjusting the payment terms of your loans,
- Availing a loan to pay off all previous debts,
- Moving credit card accounts to lower rates
These ways may be appealing to you already, but before you apply for debt consolidation, here are three questions to ask yourself to determine if it is right for you:
Can consolidation help me save money or is it more expensive?
When you purchase a treadmill via credit card, chances are that it costs more than buying it on cash basis. Some will offer it with low-interest rates, and others will again offer low to no interest rates but for a limited time only.
The same principle goes with debt consolidation. Other lending companies can consolidate your loans for a lower rate, and all the perks you can imagine, but that’s not always the case. Oftentimes, low-interest rates are available for a limited time only. Debt consolidation might be an attractive solution, but it’s not free from other fees that may make it harder for you to settle.
Our tip: do a self-consolidation. Gather your accounts and compute how much are you going to pay for each, considering all rates and other fees. You might find out that you’ll pay less by virtuously paying on your own, on time.
If I consolidate my debts, am I able to pay it off on time?
If you’ve consolidated your debts, it’s easier to pay your debt because you only have one or a few creditors to pay. This means you can easily plan your budget across your savings and expenses.
On the other hand, this might be difficult for some as consolidating debts means paying more money than what you’re used to. Some people with debt focus on paying one debt at a time, and that works for them. If you can manage to pay off your debts one at a time, assess if debt consolidation can lessen the burden of late payments over time.
Should I consider consolidating my debts?
Whether you’re leaning towards easier payment, convenience, or timely paying off your loan, you should thoroughly think about it.
Assess your current situation and look at how consolidation can help or can aggravate your debt situation. Consolidating your loans only combines all your debts, but it is still debt. You didn’t necessarily cut off your debt. It’s a debt you get to pay all your debts. Some eventually adopt a false sense of security because they had this idea that they’re no longer paying too much, which makes them lax about spending.
Since this is still a debt you have to pay, you have to practice discipline to go through this loan.