Wednesday, March 15, 2017

Two Tips On Debt Consolidation

Finding a way to get out of debt can be hard, and with all of the media hype out there about what works best, it can leave you wondering what to believe. One thing is for certain, if something sounds too good to be true, then it probably won’t work. So when you make a choice to consolidate debt in order to give yourself a bit of financial relief each month, it is critical that you do so after having first learned all you can about the process. Sometimes there may be hidden fees that you did not budget for, or you might find yourself paying taxes for “forgiven debt”. Either of these things, or some of the other problems that can arise, can put a real damper on your plans and leave you in no better position than when you started.

Two tips for a successful debt consolidation include doing the following things:

•           Make sure that your credit report accurately reflects your payments. You do not want to put all of your debt together for repayment only to have one or more of your creditors report that you are not paying them on time, or that you have paid less than what is owed on the debt. If your credit is not accurately reporting your activity, you can be hurt down the road when future financial needs arise.
•           Make sure the payment makes sense, and that you are not actually paying more that if you paid the bills separately. One thing to look at here is the rate, which may be higher than some of your individual bills, but on average may be a lower rate than what you are currently paying. Another thing to watch out for is the actual payment amount. You would not want to consolidate debt into one payment that is more than your single payments when added together. It is also a good idea to look at the time frame within which the debt will be repaid. For some people it is worth it to make a slightly higher payment if it knocks years off of the repayment term, because those years do nothing more than add interest.

In order to be successful, you have to make a commitment to stick with the consolidation plan. A good place to start in this regard is to get a budget down on paper, and take steps to cut out extras so you can follow the budget. If you need to free up some money to put towards this new budget, there are things you can do along with consolidating debt to reach that goal. For instance, you can ask your home lender to modify your mortgage, and then use the extra money you were paying on your house to fund your debt consolidation plan. For help, call our office.
For more information about debt consolidation, call us today or reach us online at We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

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