Being in debt generates a real headache, not having the immediate resources to meet our financial obligations. However, to avoid this there are options such as the so-called debt consolidation, but is it a convenient alternative?
The payment of your credit cards, late installments of an auto loan or of some real estate, even payments for a bank credit represent a considerable sum that can be solved through this system.
We know that when you accumulate debts you first think about liquidating the priority ones. If you only focus on them you could fall behind in others, generating more interests or worse, forgetting your obligations.
So, what to do? What kind of actions to take? Pay each debt individually or consolidate all and pay off?
Definition of debt consolidation loan
It is a payment strategy in which all your debts are grouped. The objective is to have a more efficient system to make only one monthly payment instead of several minimum payments, simplifying your experience and enjoying many advantages.
Debt consolidation consists of a new loan that will allow you to cover previous debts. With this, you will have a new lender, which means that your obligation will continue but summarized in a single monthly payment. Read more at https://dedebt.com/debt-consolidation-definition/.
By accepting this alternative, your financial institution will not reflect the requested money but will send the resources to each bank with which you are indebted to make all your outstanding payments.
This way your debt will be settled with these banks, without the inconvenience of paying 3 or 5 different debts.
Then, your approach will be directed towards a single monthly amortization, which leads to certain conditions that you must study and analyze to make a correct and timely decision that favors you instead of harming you.
In what cases can I consolidate my debt?
What are the ideal circumstances to make the decision to accept a debt consolidation? Well, here are some specific but interesting cases that will lead you to an intelligent choice according to your requirements.
Having organized a balance and personal and family budget that allows you to know your income and expenses.
Eliminate unnecessary expenses
When you get rid of most of those ant expenses, those expenses that you know you can do without affecting your standard of living, then, you could consolidate your debts.
Generate additional income
This is a good idea. It occurs when you increase your client portfolio in the search for salary improvements or obtaining new forms of extra income, which allow you to meet all your monthly payments.
An important factor if what you want is to succeed in paying all your outstanding debts is definitely to have a financial plan, a strategy for organizing your finances with very specific and functional alternatives for you.
Sell of articles
This is a factor that could help you consider taking debt consolidation. By selling everything you really don’t need, you can earn extra money that will give you a part to fulfill your obligations.
What to take into account before consolidating a debt?
It is essential that before consolidating your debts, you make sure you understand all their implications, pros and cons, payment terms and all elements that have an impact on this system. For example, this strategy will allow you to pay lower amounts in your monthly payment.
But to enjoy this dynamic, debt consolidation will increase the term of your payments, this means that that large previous debt that you would pay in approximately 3 years, now you would have to settle in 4 years.
It is all about the convenience and comfort that this modality represents for you, it is simply a method that works according to your profile, ability to pay, and in addition, it is efficient to a greater or lesser extent according to your financial habits.
When not to consolidate your debts
Surely you currently have some important debt that affects you and keeps you worried, such as paying your credit cards.
However, you must understand that there are thousands of ways to solve these situations intelligently, with discipline, perseverance and always by the hand of an expert.
Next, you will be able to observe which would be the least favorable scenarios to consolidate your debts:
Financial disorganization: If you do not keep track of your finances or forgetting the cut-off date of your debts is a recurring thing, then do not risk requesting a debt consolidation.
There are cases in which some people do not have the financial resources to deal with several debts, this generates stress and uncertainty and that is when you must reason and start paying at least one of them, such as the credit card.
With our service, you can defer your credit card debt in terms of 3, 6, 9, 12 or 18 months.
We invite you to use our calculator to know how much money you could differ.
Debt consolidation is a plan designed for anyone who has high indebtedness and requires an effective and functional solution. However, it is important to note that no strategy is infallible or ideal if there is no responsibility, good financial habits, and awareness.
For example, if you are able to pay your credit cards, but you only decide to cover the minimum, or you have the money for your fees and choose to spend it on cigarettes, your effort to increase your income to pay off your debts will be of no use.
So if you have several debts and want to generate a change, such as paying credit cards, you have the solution on your side. Reflect on your situation, choose well and take charge of your financial life because you can do it.