Debt consolidation makes sense for a lot of reasons, but it is not a matter of being good or bad. You need to factor in a lot of things to determine whether it will work for you or not. In other words, it strictly depends on your specific situation.
Consolidating loans makes sense if you’re helplessly drowning in debt and you can’t negotiate a lower interest with your creditors. It can also help if you are facing high monthly payments, high-interest rates, and monthly the bills are quickly piling up.
Coping with repayments comes down to mathematics and behaviour. Once you’ve taken a personal loan for debt consolidation, here’s what you need to do:
Create a realistic budget.
When it comes to repayment, it’s not wise to spread yourself too thin. Determine whether you want to pay the lowest balance cards first or the highest interest cards, and weigh their pros and cons.
Set up auto-pay.
Setting up automatic payment will help your money manage itself. It also allows you to provide more than the minimum repayment every month and set up paperless billing, a more convenient alternative.
Setting up a budget and payment methods is just the math part of the equation. Your behaviour plays an equally important role to ensure debt consolidation works in your favour. Remember that paying off all your debts and credit cards with a loan only presents you with a new debt, leaving you no room for mistake.
Get help for your debt.
Don’t let social stigma or ego stop you from getting help with your debt. There are plenty of ways to get back on the right track – from taking better control of your credit cards to consulting debt repayment programmes. You can also look for advice on more effective budgeting and spending.
You shouldn’t be afraid to explore your options when it comes to debt management. It’s all about recognising the risks and benefits, and securing a way out before it’s too late.