When it comes to debt, worry is a constant companion. No one likes to be in the cross hairs of banks or businesses looking for their money back, so the quicker it’s gone, the better. Still, everyone’s got an opinion on how to solve debt, and debt consolidation rarely gets a fair shout. For some it can be an extremely useful plan, for others, a crippling mistake.
Like with most things, the potency of debt consolidation depends almost entirely on how the user intends to utilise it. If most people have debt from multiple credit cards, streamlining it all into one single loan can be relieving; at least in terms of organisation. With the right frame of mind, the process can be a rather viable solution to many, but not every, debt concern.
How Does Debt Consolidation Work?
Here’re a few do’s and don’ts of debt consolidation.
Do Change Your Behaviour
While debt consolidation can be something of a financial lifeline, it’s by no means a continual lifesaver. It’s not there for you to repeatedly exploit, or for you to run to and cower behind every time you deliberately let your finances get out of hand. Put simply, it’s not a get out of jail free card, so make sure that you acknowledge your past financial mistakes and change your behaviour in your personal spending habits too.
After all, it’s obviously not ideal to need something like debt consolidation in the first place. Try to improve things on your end or at least try to identify where your financial misfortunes are coming from. If you can acknowledge the fact that you’ve been complacent and that it won’t happen again, the process of debt consolidation will be far more bearable and useful to you.
Don’t Assume It’s All Over
Debt consolidation is not a ‘one and done’ affair at all. You’ll still need to pay off other loans on time and make your credit payments in a proper fashion. If you miss payments your credit score will not only become more problematic, but you’ll also find that your interest rates on your repayments go up too. Ultimately, debt consolidation isn’t as user-friendly as the most naïve might assume – it’s more of a motivator.
Roll up your sleeves and get to work, as you want to be out of these woods as fast as possible. Don’t be fooled by those longer repayment deadlines, because they occur over a much longer space of time which, eventually, tallies up to more payments and overall expenditure for you. Budget what you can feasibly repay effectively and pay off as much as you can in each individual installment. You’ll get out quicker, and thus save money in the long run.
Do Browse Your Options
Even though those behind debt consolidation might well enjoy masquerading as white knights, it doesn’t mean that every debt consolidation plans out there is right for you. Take your time and mull things over, and you’ll be far more likely to make a wise and beneficial decision.
There’re many finance companies like Think Money who are always happy to help you if you’re struggling, so make sure you’re only visiting reputable businesses. You’ll see a lot of tricksters and fraudsters banding around wild claims about debt consolidation online; research them and authenticate them yourself. Only work with the best of the best and apply for their services and do well to ignore the rest.
Don’t Get Desperate
One thing that debt causes is very intense hysteria. Get away from that mindset as quick as you can, because in all honesty, it won’t help you. Panic leads to ill-judged actions and sloppy mistakes, so make sure that you’ve got a grip on everything you’re doing, including your own composure.
After all, if you find yourself applying for multiple different schemes from various other parties, this will be noted and your credit score will become even more of a problem, hampering your financial situation further. You’re looking for a golden opportunity here and a perfect bullseye, rather than a series of handouts that will land you in murkier financial waters. Take your time to decide what’s right for you.