Debt has been part of civilization ever since it started. When barter was the still the accepted norm, people would owe items from other people in exchange of goods or services. When currency was introduced, a lot of credit tools were built around it to extend its purpose to people who cannot afford it at specific times but has the ability to pay sometime in the future. There is nothing wrong in incurring debts, the challenging part is making sure you are able to fulfill your financial obligations.
There are a couple of solutions you might want to consider if you are already in a financial bind with all your debt obligations. But what most people fail to realize is the fact that there are debt solutions that would work wonders even if you are not yet neck-deep in loan payments such as debt consolidation.
Being at the forefront of debt relief options, debt consolidation works best for people who are able to meet their minimum monthly debt payments. It is only at this circumstance are you able to maximize the advantages of debt consolidation. It is because this solution requires you to have the ability to meet monthly payments on all your debt obligations – if only needing a small reduction of the amount. Take note that the reduction is not on the total debt amount. It will only be stretched so as to distribute payments over a longer period – thus the lower monthly dues. If you are unable to settle even one of your loans monthly, consolidating your debts might not be a good idea.
This works best with unsecured loans like credit card bills. The idea is to merge all your payables under one account. Say for example you have three credit cards that you use for grocery, clothes and home improvement. Debt consolidation can basically mean transferring all three payables under one card. It would help if your choose the lowest interest rate among all your cards. Or it can be getting one but loan to pay off all of them and thus concentrating on only one credit account.
The idea is to combine all your debt under one card and make one interest payment instead of three. It frees you up on some extra dollars that you can also put into payment to save on interest payment and pay off the debt earlier as well. This is not just for credit cards but other loans as well such as medical bills and payday loans.
Debt consolidation can also include your house mortgage but it requires a lengthier process. If you have a stable income and confident that you can make your monthly payments including your mortgage, you can opt to take out a second mortgage on your home to pay off for all your debts including your mortgage.
The only set back in debt consolidation is you might have the false sense of security and belief you are paying less obligations. Although this might be true, this could lessen your vigor in making sure that you meet your obligations and even convince you that you can make unnecessary purchases again.
Debt consolidation offers a solution to your debt problem and if done correctly, could offer financial freedom a lot faster than you have initially thought of. It just requires discipline and hard work as you persevere in paying off your loans.