Owing money can put a massive strain on your personal finances. It can also lead to stress, depression and a whole host of other issues if you feel your debt is spiralling out of control.
Debt Consolidation could prove to be the answer to your problem and in this post, we’ll take a closer look at Debt Consolidation and how it can help you get back on top of your finances.
What Does Consolidating Debt Actually Mean?
If you were to research the definition of the word ‘consolidate’, you would discover that it basically means to combine a number of things into one, or to strengthen one’s position; whether that be financially or in some other way.
When it comes to Debt Consolidation, it’s all about making your finances work for you rather than against you. This can be achieved by consolidating a number of debts into a single debt, which is done by paying off those other debts with something like a Debt Consolidation Loan or a Personal Loan.
There are a number of distinct advantages to consolidating your debts, so let’s take a look at what they are.
You’ll Only Have One Debt To Repay
Let’s say you currently have 2 credit cards and a Personal Loan you are making repayments on. That’s 3 forms of credit that you have to remember to pay by the due date. It’s likely that all the due dates all fall on different dates as well, so unless you’re diligent, it can be easy to forget to make one of the payments on time. This will not only incur a late payment fee (in most cases), it can also adversely affect your credit score.
When you consolidate your debt into one loan, you only have to remember one payment by the due date each and every time, which is so much easier!
Reduce Your Repayment Amounts
Generally speaking, once you’ve consolidated your debt into a single loan, perhaps with a longer repayment period, you’ll be reducing the overall amount you have to repay each time. This may not always be the case, but usually, Debt Consolidation will mean a reduction in your monthly repayments, compared to having separate loans or credit cards to repay.
As a simple example, you might have been repaying $750 a month before, but after consolidating your debt, the monthly repayment might only be $500 instead. This frees up an extra $250 a month that you can use for other purposes.
Reduce Your Interest Rates
Interest rates, particularly on credit cards, can be a real financial killer and something that can put a huge strain on your personal finances over a long period of time.
Debt Consolidation, particularly when it comes to credit cards, can reduce those interest rates by a significant margin in many cases. If you shop around for the best Debt Consolidation Loan deal, this will very likely be the outcome.
Take a Load Off Your Mind
One very important aspect of Debt Consolidation and its advantages is it gives you more peace of mind and can reduce your stress levels. Money stress is common and can lead to all sorts of issues, so on this level, Debt Consolidation can be just as beneficial for your mental and emotional well being as anything else.
Money worries can affect your personal life, your relationships, your ability to have fun and simply enjoy yourself. Stay on top of your debt and your finances and you’ll feel more in control of your life.
Choosing a Debt Consolidation Loan
When it comes to Personal Loan providers, Australia has many lenders offering options for Debt Consolidation. You need to shop around to find the best deal for you, one that will work in your favour and offer all the advantages of Debt Consolidation that have been mentioned above.
The idea of consolidating your debt is to put yourself in a better financial position, so it’s worth it to take your time and do your research into loans before making a decision or a commitment.
Once you’ve found a deal you like, discuss it with the lender and ask any questions you may have before signing on the dotted line.