There is no doubting that debt consolidation is one of the best ways to get out of debt. However, there are a few things you need to keep in mind before consolidating your debt; and use the experience to manage your finances more judiciously.
First things first, do seek professional help when you decide to consolidate your debt. A debt adviser can introduce you to many options, including how to effectively manage your debts yourself.
He may also offer useful advice on companies that offer debt consolidation loans. The debt repayment term is an important consideration if you take out a debt consolidation loan. A longer term means lower monthly payments, but your overall cash outflow over the term of the loan will be bigger.
You will also need to decide whether you want to take out a debt consolidation loan or a debt consolidation mortgage. With the latter, you will get a lower annual percentage rate (APR) and a longer repayment term, but you will be putting up your home as collateral.
This is especially true if you have taken out a home equity line of credit or already have more than one lien on your home. After taking out a debt consolidation loan, don’t continue using your credit card recklessly.
You will only end up replacing the debts you have just paid off with new ones, and get into this harmful pattern again. For emergencies, keep aside one credit card, but think twice every time you feel the urge to spend.
Remember that injudicious spending is what resulted in such high debt in the first place.
Contact us today and see what we can do for you.