Financial stability is downright better than financial independence. The latter is a state wherein the consumer can afford to provide for their present needs without borrowing. The former goes beyond that. To be truly financially stable, a person has to have enough to support their current expenses while at the same time, having the funds to finance any unexpected incidents that require it.
The key to achieving financial stability is to grow your savings. Of course that is easier said than done.
Being in debt while aiming for financial stability may not be the easiest feat to accomplish because you are torn between paying off what you owe and growing your reserve fund. Most of the time, you are compelled to send every penny towards your debt payments just so you can truly be free from it. However, you need to understand that your savings must be given attention too. But for that to happen, you should have more than enough to cover for both your debt payments and your basic necessities. If you have limited resources, that may be very difficult to do.
Fortunately, there is debt consolidation. While the other debt relief options like debt settlement and bankruptcy can lower your monthly payments, they will cost you a good credit score. If you want to be really safe about it, go for consolidating your debts.
But how does one achieve financial stability through debt consolidation?
The simple solution lies in the decreased monthly payment that this debt relief program can provide. By distributing your current balance over a longer payment period, the monthly contributions can be lower than the current payment scheme. That means, there will be funds freed for other expenses. Given your intent in becoming financially stable, these funds will go to your savings.
The great thing about this lowered payment is that you will not be penalized for it. You either gain the approval of the creditor for the new payment scheme (debt management) or you have paid them off and you are now following a lower scheme with another lender (debt consolidation loan).
Another reason why financial stability is more possible with debt consolidation is the fact that you will adapt a new method that requires a single payment. This means you don’t have to spend too much time on monitoring your debt payments. After all, one payment is not so hard to track. This ease and convenience will allow you to exert your efforts into other activities like finding ways to grow your income. By doing so, you are increasing your extra money. As you increase your finances, you either have more amount for your debt payments or you can grow your savings faster.
In the end, you will realize that financial stability requires taking care of both debts and savings. Debt consolidation can take care of both without a problem. Through this method, you are setting yourself up for a debt free life that does not require as much clean up as the debt relief alternatives that ruins your credit score.