subject: Debt Consolidation - A Great Idea If You Want To Save [print this page] It is not unusual to find that many households have numerous debts scattered across a range of credit cards, personal loans and interest free loans. Add all of these debts to your current home loan, if you have one, and it is easy to see why the average family is struggling on a day-to-day basis.
You can continue to pay the minimum amount on each of your debts on a monthly basis, and when the interest is continually being added on, it can often be months before you see any signs of a positive result in terms of debt reduction. At the same time you are paying each of these debts off individually, you may find yourself short of funds and end up placing groceries on the credit card in order to put food on the table. As you can see, the cycle never really ends and it is very easy to find yourself spiralling out of control.
Debt consolidation is a sensible idea for those who have had enough of forking out money to pay this card and that loan, month after month, without noticing a reduction and without having excess funds to start a savings plan. Debt consolidation means that you can roll all of your current debts into one complete loan. You will only need to make one monthly repayment, which is usually a lot lower than all of the individual monthly payments you may have been making previously.
With only one payment to make, you could choose to pay more than the monthly minimum to pay the entire loan off as quick as you can, or you could use the excess funds now at your disposal to create a great savings plan. Having a solid savings plan will allow you save for a rainy day and will help you to stay away from the use of credit cards and interest free loans.
Once the debt consolidation process is complete, close your credit card accounts completely to remove any future temptation. Work out a weekly, fortnightly or monthly budget you can stick to and make sure you have included the exact amount you are going to be saving as well. When a plan is in place, it will be a lot easier to stick to.
