If you are struggling with debt, you might want to consider debt consolidation. Debt consolidation is the process of getting one loan to pay off all of your debt. Instead of owing on multiple debts with multiple interest rates, you will have just one loan with one interest rate.
Benefits of Debt Consolidation
Dealing with multiple debtors is a hassle. Consolidating simplifies things. Instead of dealing with multiple debtors, you now only have one. This means no more calls from collection agencies. No more letters from multiple organizations demanding money. You will no longer be pulled in every direction at once. When it comes to your debt, you will only have one person that you need to talk to.
If removing collection agencies from your life sounds good, what about a small monthly payment that you can actually afford? Consolidating restructures your debt so that you get the smallest monthly payment possible. This small monthly payment will help you afford to pay off your debt without taking money away from your living expenses.
In addition to one low monthly payment, you will have one interest rate. Tracking finances can be a daunting task. Multiple interest rates complicate matters and make it more difficult to track finances accurately. With one interest rate, you can accurately forecast future payments, calculate total debt incurred and establish a realistic budget. See if you are a good candidate for debt consolidation here.
Negatives of Debt Consolidation
In order to achieve a low monthly payment, the term of the loan is extended. This means that it will take longer to pay off your debt. You will want to plan for paying off your loan before consolidating. It might be a worthy idea to double up on payments when extra money is available and pay off the loan early. This will reduce the total amount paid in interest and save you money in the long run.
While consolidating your debt will help you manage repayment, it does nothing to change the spending habits that created your debt. You will still need to learn financial discipline and how to live within a budget. You will still need to learn the difference between a need and a want. Without financial discipline, you will continue to dig yourself deeper in debt. Debt consolidation can work but only if you change your spending habits to make it work.
Top Debt Consolidation Companies
National Debt Relief: This is one of the most well-known and reliable debt consolidation companies. They have an “A-” rating from the Better Business Bureau, which is one of the top ratings for debt consolidation companies. Beyond making efforts to settle your debt, they also provide debt counseling and work with companies to help forgive things like late fees and other add-ons. If you are interested, check out National Debt Relief here.
Freedom Debt Relief: Freedom Debt Relief is also one of the most respected debt consolidation services in the business. They have an “A” rating from the Better Business Bureau, which is pretty much unheard of for a debt consolidation company. They give you a free debt evaluation to see what steps they would need to take to eliminate your debt, and then will work with you to take those needed steps. If you are interested, check out Freedom Debt Relief here.
Equifax Debt Wise: This isn’t necessarily a debt consolidation plan but can give you the tools to get out of debt quicker all by yourself. The beauty of this service is that it is run by one of the credit bureaus, so you know it is legit. Equifax has an “A” rating from the Better Business Bureau and is known for being reliable. The service gives you access to your credit reports and scores so you can track your progress. It also has a Fast Pay Plan Wizard that can help you develop a plan to pay your debt within 10 minutes. If you are interested, check out Equifax here.