Debt consolidation and debt counseling are two of the most commonly utilized methods of managing one’s bills and debts. With numerous bills, expenditures, late dues and high interest rates that most of us are faced with, most of us resort to an easy way out. Such ways as debt consolidation and credit counseling have proven themselves helpful in attaining the financial freedom that we’ve long been waiting for. Who doesn’t want to live a life free from financial worries and stress? Nobody! Now let’s get to the basics.
What is debt consolidation and how does it differ from credit counseling? How does the two benefit us?
Debt Consolidation is one effective method of managing your finances by merging your debts into one single loan; allowing one to pay a single and a much lower monthly payment. It offers the benefit of an easier life, a much lower interest rate, timely payment of bills and debts, an increased possibility of improving one’s credit standing, and keeping good relationship with your creditor, while saving one’s time, money and effort.
A good example for debt consolidation is this: One consumer has 6 existing loans, with different terms and conditions. Through debt consolidation, all of these debts are merged into a single loan. So for every month, the consumer will only be taking care of a single and a much lower payment and the interest rate paid is less. This method is easy to achieve and saves you dollars from the extra fees that should have been paid to a third party tasked to manage your bills.
Credit counseling involves a third party who provides the consumer a straightforward and an in depth assistance and advise on how to properly manage your debts. Credit counseling is a service provided by highly qualified credit counselors or most commonly referred to as debt counselors.
Credit counseling is said to provide an honest to goodness service without the debt counselors taking advantage of one’s savings. They give you a thorough and perhaps the best advice as that of banks and other financial institutions as to how you could well manage your existing debts and manage your finances.
Once you have decided to enroll yourself in credit counseling, right there and then, you will be enrolled to a Debt Management Program, a program which provides a simple and easy way to manage your monthly payments. You will be working hand in hand with a professional debt counselor and find ways on how you could lower your debts. Credit counseling would also teach the consumers all about budgeting, credit, fixing and rebuilding credit and the likes.
However, one must be financially prepared to pay the counseling fees and the expert advice provided by debt counselors, because at most times, they come a bit costly.
Whichever method we choose, debt consolidation and credit counseling are both proven and effective methods to manage one’s debts. It all depends on which method you are comfortable with.