Can Money Management Help In Any Way With Debt Consolidation?
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Money management – how does it count with regards to your consolidation program? Debt management helps you with better management and better usage of the credit cards, and any other forms of credit. Thus, this is also supposed to help you with paying down your debts with ease. Now, in addition to managing your money wisely, you can also opt for debt consolidation, for this is going to help you with paying down your debts even more easily.
Money management and debt consolidation
Managing your money wisely
In order to be able to manage your money more wisely, it is important for you to:
- Determine the total income– It is important for you to determine the total income which you can make. This may help you with better money management.
- Follow a budget– A very important step towards money management is following a budget. Budgeting helps you to keep proper tab on your total income and also the expenses. This is also supposed to help you with saving money on the expense. In addition, this is also supposed to help you with determining what your affordability is.
- Improve sources of income– It is important for you to determine the sources of your income, as this may help you with improvement in the sources of your income. This too matters with regards to money management.
- Slash expenses– Try to slash the limit of your expenses, as much as possible. This may help you to save money on the expenses, and therefore use that money towards debt pay off.
In addition to the above, you can opt for debt consolidation. This eases the pressure of debt from your shoulders. There are various advantages of debt consolidation and these are:
Debt consolidation – Advantages
There are various benefits which debt consolidation offers, and these are:
- Decreases the interest rate– With debt consolidation, the interest rate gets lowered. Thus it helps you save your hard-earned money. With the new consolidation loan or the new credit card, you have to deal with one creditor only and if any discrepancy arises, you need to make one phone call instead of the several calls.
- Lower monthly payment– As you will have a new loan with lower interest rate, your monthly payment amount will also be low. This will be according to your affordability.
- One creditor and one payment– If you are required to make payments against multiple debts, there are chances that one or two bills may get missed. It is also problematic to handle multiple bill payments. But, with debt consolidation, you have to make a single payment, so, there won’t be any chance to have the payment missed.
- Tax breaks– If you take out a home equity loan with a lower interest rate to pay off your credit card bills, you will get some tax benefit from the amount you make towards paying your mortgage.
- Improved credit– As you make the payments through credit card debt consolidation, your credit history builds up and thus your credit score increases.
So, this is how you will be required manage your money and pay off the debts through consolidation.
Author’s Bio:Article contributed by Martha Jackson, a community writer of Debt Consolidatio Care for the last three years. She has expertise in the financial fields and always ready to help people with different financial needs.
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All the points are good. And it’s always important to make sure debt consolidation is the right approach for you. One approach may work for one individual while another approach works best for someone else.
Whatever gets you out of debt and keep you out of debt is the best plan.
I totally agree with the four important things to remember that you provided in managing money wisely. However, debt consolidation was nto effective for me so we opted for the snow ball effect, which helped us pay our debt faster and a lot easier in our budget.
Modified snowball has worked best for us as well.
I don’t think there is anything wrong with consolidating loans at all as long as it isn’t used as an excuse to get into more debt! Loan consolidation should only be used when it is financially beneficial and will help someone get out of debt faster!
Debt consolidation can work very well if a person realizes that they need to stop using any credit cards that have been paid off by the debt consolidation loan. In many cases they don’t . They figure that now that their cards are at a zero balance they can go ahead and use them and build up more debt. If they don’t pay attention they will suddenly owe twice as much money – the loan and new credit debt. That idea may shock some people, but it actually happens quite frequently.
I don’t really understand that mentality, but it’s not surprising. Like A. Joe said, unless you change the behavior, it does not good to consolidate debt.
I may have been mislead, but does debt consolidation hurt your credit score at all? I don’t really care about my score, but I’m wondering if there is any impact for those that may care?
Jacob, I’ve never had to use a service personally, and I’m not completely sure. I would imagine you are already maxed out and behind on payments before you would use a debt consolidation service, and I bet your credit score is already affected. I will ask Martha and find out.
Even if someone chooses debt consolidation, they haven’t yet attacked the root of the problem…poor money management, which is why I love the steps at the top of the post. Solves the immediate problem but also makes sure it won’t happen again.
Getting out of debt is nothing if you don’t stay out of debt.
I’ve been thinking about consolidating my student loans. There’s just so many small ones that it gets annoying to pay.
If it lowers your rate, not a bad idea, but it’s like refinancing a house in that it extends the term. I’m sure you’d probably make the same payment and get it all done on the same schedule.
I had to consolidate my credit card debt years ago when I had gotten into a debt hole. It was great to have just one payment and have the lower interest so I could see my monthly payments actually make a dent against my debt each month. The nice thing was that the consolidation itself had no impact on my credit.
If you have a ton of loans and other debt to keep track of, sometimes it’s easier and psychologically more manageable if you just have one payment a month. We didn’t consolidate our student loans, and one of the negatives of that choice is having lots of different payments going out the door each month – sometimes it can be a hassle keeping track of them all.
I did consolidate my student loans at a pretty good rate but it stretches the term. You can obviously pay more, but it’s tempting not to. My husband also consolidated and we found out later that he could get repayment for being a teacher in an underserved area, but only if we hadn’t consolidated. We lost out big time on that. If you work in a public service job, look at all the options before you consolidate.
It can certainly help if you have no other options. Other points to consider are the impact on your credit score and the longer term on your consolidated loan.