Even just one debt, when it has the right amount, can really affect your life significantly. If you happen to be unfortunate enough to acquire this debt during a less than favorable economy then that can become a serious dilemma. If one debt can pose as a problem, imagine if you have multiple debts. All these credit obligations combined can lead to devastating effects to your future.
The average American household is not just burdened with one debt. If they have multiple credit cards, you can expect that all of these cards have balances on them. Add to that the mortgage payments, car loans and student loans and you have a jumble of debts that can be very hard to get out of.
The problem with multiple debts that consolidation can solve
Your multiple debts can ruin your life in ways that you cannot imagine and if you want to keep the damage low, you may want to consider debt consolidation to solve it. There are various methods used to consolidate debt and you need to be able to choose which of them can benefit you over the others. But before you find out the different pros and cons to debt consolidation options let us identify what it can do for you and your multiple credit accounts.
Keeps your stress down. One of the reasons why people opt to consolidate debt is to keep the stress level down. Debt can trigger the adrenaline rush in you and as long as your debt remains unsolved, you will find yourself immersed in this emotion for a prolonged period. It can be confusing to have a lot of debts and that can lead you to feel that you are unable to control the situation. It will stay on your mind and will keep you anxious as you try to monitor all of the debts that you owe. If you combine them into one, all the effort will be a lot less and the stress will eventually go down.
Keeps your monthly payments low. One of the goals of debt consolidation is to lower your monthly contributions to loosen some of the restrictions on your budget. This will help make your life less miserable without incurring any penalties or charges for the low payments you will make every month.
Keeps you from forgetting your due date. Since you only have one payment to think about, it will be near impossible to miss your due date. With all the reminder tools available, you don’t have to worry about ever forgetting to pay your debt on time. That is one monitoring task to ease off your shoulders.
Keeps you free to focus on other things. Speaking of monitoring, one debt is not too hard to look after and that will free your mind to think about other things. With the stress level down, you can choose to concentrate on other things that will help you grow your personal wealth and improve your financial condition.
Keeps you from eluding the lesson. One of the best things about debt consolidation is it allows you to learn your lesson. You still get to pay for all your debts although now, it will be through an easier payment term. That will help you realize your mistake without really making your life too miserable.
When does consolidating debt make sense?
Some people may think that debt consolidation is not the only debt solution out there. That is true but there are several reasons why you want to choose this option.
When you have variations in your debt. Understand that some debt relief options cannot solve certain problems. For instance, debt settlement cannot do anything for secured loans. This is not really a problem for debt consolidation – at least if you choose debt consolidation loan. It can even help you solve student loan problems.
When you don’t need a debt reduction. It is very important that you consider the lack of debt reduction in this debt solution. If you cannot afford to pay the total amount of debt that you have because of a severe financial crisis, it may be best to opt for another program to help you with your multiple debts.
When you need to restructure your payment scheme. Some people are having a hard time with their debt but they only need to restructure their debt payments to make better progress with their debts. If this is your financial condition, then you can cope with your debts well enough with debt consolidation. That means you should have a stable income to support your payments.
When you want to keep your credit score intact. If you want a debt solution that has the least effect on your credit score, debt consolidation is the right solution for you. Make sure that you understand the repercussions of each debt relief program to know the pros and cons that you have to face.
It is important that you calculate carefully to know if debt consolidation is the right debt solution. You want to make sure that your lower monthly payments will happen and that can be done with the help of a debt consolidation calculator. There are various sites online that can help you with this and we suggest that you look at the ones from AARP.org and Calcxml.com for starters.
Here is a video that you can watch to confirm if you should consolidate your debt or not. It also discusses the different options that you have in consolidating your debts.