Should You Consolidate Debt?
Debt consolidation is a complex topic, and shouldn’t be entered into lightly. The concept of debt consolidation is that you take all of your outstanding debts and, with the help of a debt consolidation loan, consolidate all your debts into one monthly payment with one interest rate instead of multiple monthly payments with different interest rates.
It’s important to ask for advice before entering into a debt consolidation plan or taking out a debt consolidation loan. Credit unions and creditors will often offer these loans because they are able to make a good profit off of you through the interest rate offered in the consolidation.
You should also consider how much you would pay monthly for the consolidation. If the loan payment is more than what you currently pay toward your debt and you have the budget to increase your monthly payment, it may be better to simply increase your payments on the individual debts rather than consolidating them. If your loan payment is less than you pay on your credit cards, you may end up paying a lot more in interest because of the length of the loan term.
If you have a committed program of on-time, well-managed payments, debt consolidation may not be necessary. It should be considered more so when you find yourself drowning in debt and unsure how to approach your payments and payment schedule. Often, a debt consolidation loan is best for those with such a wide variety of debts and interest rates that it’s difficult to keep track.
If you’re considering debt consolidation, you should probably look into credit counseling or a debt repayment plan so you understand the long-term strategy and logistics of everything that goes into debt consolidation. Ultimately, debt consolidation is best considered on an individual, person-by-person basis and should not be viewed as a one-size-fits-all solution.
Interested in learning more about debt consolidation? Contact Cain & Daniels for a free consultation and to discuss your options to getting to a debt free life.
