Millions of people have debt– it is just a fact of life. From large debts like mortgages to smaller debt like a credit card bill, almost everyone is managing various forms of debt and it can get complicated! Even the most organized and frugal people may have a hard time staying on top of their debt and that is why you should look into debt consolidation as it can be the best way to stay on top of your debts. This article will show you how to use this useful tool to your financial advantage.
1. Calculate Your Debt
If you are thinking about consolidating your debt, you should first assess how much debt you have. Take all your accounts into consideration (student loan debt, current credit card debts, car loans, etc.) and add them all up to get your total debt. Now you know exactly how much debt you need to pay and have a tangible, real number to work with. This is essential to help you tackle your debt and when you start the process of consolidating your debt.
2. Assess the Interest Rates
Look at the interest rates on all your debts. If there are some rates that are incredibly high, you will want to consider consolidating these first, locking in a lower rate than you are currently paying. If one of your debts already has a very low rate, you can put it lower on the priority list. However, to truly make your debts more manageable, you want to try to consolidate them all- it will be much easier to have one monthly payment at one, low-interest rate! You should also look at various late fees that lenders may be charging you. These fines and fees should not be ignored! Be sure to put debts with higher fees at the top of the list for those which you need to consolidate.
3. Consider Your Loan Options
The next step to consolidate your debts is to take out a loan in order to pay off every debt in full. You should know exactly how much you need to pay all your debt off and that is the amount you will need from your new loan. Look at various kinds of loans and different lender options. If you are currently paying very high-interest rates, you may want to take out quick cash loans that will get you money in a hurry, so you can get those higher rates paid off. Make sure whatever loan option you go with has a lower rate than you are currently paying on average. You can find out more information on various personal loans at MoneyMe Finance.
4. Pay All Your Debt
Once you have been approved for your new loan, take the cash and pay all your existing debts in full. Those accounts will be closed and considered completed (also a great thing to help improve your credit score!). Now you only have one debt account to manage! While the total amount of debt will be the same at the beginning, it will be much easier for you to stay on top of one payment, paying on time each month. It is also nice and easy to budget as your monthly payment should not fluctuate. You can plan your payment schedule and even see the exact day when all your debts will be paid in full!
5. Use Apps
There are a lot of helpful debt tracking apps that can be quite useful when it comes to staying on top of your debt. First, look at what your bank or your lender has to offer as many companies have their own apps where you can manage your account directly. Other, third-party apps can also help, sending you notifications when your payments are due, keeping you up to date on how much debt you have left or giving you small pointers to help you tackle your debt smarter. Don’t be afraid of technology as it can be your best financial friend!
6. Avoid New Debt
After you have consolidated your debt and have started seriously paying off your debt in a smart and manageable way, it is imperative that you avoid taking on any new debts. Do all you can to try and spend within your means and never take that credit card out of your wallet! If you do not take on any new debt, you will be completely debt-free in no time! Stick to your plan and use debt consolidation to stay on track toward staying on top of those old, pesky debts.
7. Make Your Payments
Consolidating your debt is the first, smart step to stay on top of your debts. You will have one, easy payment to think about and be able to budget wisely. With that in mind, it is important to keep making those monthly payments on time. By consolidating your debt, you have put yourself in a good financial place, making your payments manageable and within your budget. Don’t turn back! If possible, set up automatic payments through your bank so that your debt is paid consistently and on time without you ever needing to think about it. Making your payments on time will prevent you from late fees and from falling into old, bad debt habits.
If you are ready for an easier way to handle all your debts, definitely look into debt consolidation. From quick cash loans to personal loans, you will find a good loan option for you that is nice and easy, helping you be less stressed about your debt and get out of debt faster. Once you consolidate your debt, stay on top of your payments, using tools like financial apps and automatic payments. Of course, try to avoid all new debts if possible! Follow all these tips and debt consolidation will help you get on top of your debt and then get out of debt.