Consolidating Debt: Considerations & Information for You

Consolidating Debt: Considerations & Information for You

People who miss their payments aren't simply deadbeats who have no intention of paying up. They are regular people like you and me who for one reason or another have found that they have run out of funds before they have run out of expenses. If you find that you are getting buried under the weight of many separate credit cards, loans, utilities and other expenses, it might be time to think about consolidating debt.

What is Debt Consolidation?

Essentially, debt consolidation involves taking all of your outstanding debt, bringing it together into one new larger debt and making one single payment a month toward your whole outstanding balance. The idea behind this is that by bringing your debts all together, you can get a lower interest rate on one large loan than what you were paying on each loan separately. Even a small reduction in interest rate can make a huge difference in the amount of money that you are paying out each month. In some cases, your loan is extended but easier for you to handle and in other situations, this would help you to pay off your debt earlier. In either case, it definitely allows you to budget your finances better as you will know in advance exactly how much you need to pay toward your consolidated balance.

Is Consolidating Debt the Right Choice for Me?

This option is not for everyone, and it may not be in your best interests; it really depends on your current debt load and interest rates as well as whether your debts are secure or not. This is why it is a very good idea to seek out the assistance of a credit counsellor. You might expect it can be a humiliating experience to talk to someone about your finances when they are not in good shape, but this is exactly why and when you need help. Credit counsellors have seen it all and they are trained to be sympathetic and professional. They are there to help you, so take the opportunity to receive their financial expertise.

Be prepared to discuss your finances in detail. Know who your creditors are as well as how much your payments are and what rate of interest you are paying for each monthly balance you are carrying. It is by going through the details that a counsellor will be able to understand your debt and help you to understand it as well. They will be able to guide you through creating a plan that will help you to get out of debt and solidly on your feet, with or without consolidating debt.

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