Should I Consolidate My Debt?

There are many ways you can tackle your debt, one of those being debt consolidation. So what exactly does debt consolidation mean and how do you know if it is a good strategy for you?

We all have debt. Depending on what kind of debt and how much there are a number of solutions that could help you finally eliminate it. 

What is debt consolidation?

Debt consolidation is exactly as simple as it sounds. It is simply moving all of your debt into one place and paying down one account each month. Many people do this with credit card debt instead of racking up interest and keeping track of due dates on multiple accounts. There are a few ways to consolidate your debt and pay it off effectively like using a balance transfer credit card, personal loan or retirement.

Who can do this?

Debt consolidation isn’t a great idea for everyone but it can be very effective if you are the right candidate. This method of debt management is great for those who have credit card debt that spans across multiple cards. People who would benefit tend to have trouble making any headway on their principal balance, paying mostly interest every month.

Why is it worth it?

Consolidation can make paying it off easier and more affordable thus making the process faster. By moving your debt from multiple cards with varying interest rates to one card with a lower rate you will save on interest every month and make more substantial payments on the principal balance. Having one payment will also keep you on track and allow you to better anticipate your monthly bills.

How can I start?

The first thing you should do is figure out how you want to consolidate. Do you want to transfer balances to one credit card? Will you take out a personal loan? Look around and see what kind of interest rate is available to you. Once you have done that figure out how long it will take you to pay your debt off so you can plan your finances and budget accordingly. Also be sure to cut up those cards! The last thing you want to do is make more debt while you are trying to get a handle on what already exists.

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