Best Way To Consolidate Debt in 2019
With millions of Americans in debt, many are looking for a simple, effective strategy to obtain financial independence. One strategy people are using to reduce their debt is debt consolidation. Today, we are going to go over a wide variety of information about debt consolidation. Let’s get right in!
What Does It Mean To Consolidate Debt?
Debt consolidation may sound like a tricky term, but don’t worry it’s actually simple. The first step of debt consolidation is gathering all of your sources of debt. From there, you take out a loan to pay that debt. Finally, you repay the borrowed loan money.
How Can Consolidating Debt Help Me?
Now that you know the basics of debt consolidation, let’s look at how it can help you gain financial freedom. By consolidating your debts into one monthly bill, you accomplish a few things:
- You organize all of your debt into one, easy to pay bill.
- You may get a lower interest rate by consolidating your debt, helping you save money.
- Debt consolidation can help you come up with a quick, organized plan to eliminate debt.
When To Consolidate Debt
Debt consolidation may be an excellent option to repay your debt. However, you should take into consideration your current situation and debt before turning to debt consolidation. Here are a few instances where debt consolidation may be advised:
- If you have a few small sources of debt that you want to organize, debt consolidation may be right.
- If you are looking to pay off student loans.
- Debt consolidation would make your monthly bills lower.
In each of these situations, consolidating debt can help you obtain financial freedom.
Effective Strategies For Consolidating Debt
Before considering debt consolidation, there are a few key strategies that you should use to consolidate your debt effectively.
- Gather up all of your tax returns, financial records and current expenses. This will allow you to determine your current situation.
- Enlist the help of a professional. Professional debt consolidation services can help you on your path to financial freedom. Here at Trout Associates, we offer debt consolidation services.
- Always make sure you repay debt consolidation loans in full and on time.
How Does Debt Consolidation Impact My Credit Score?
For people consolidating their debt, one worry is the impact it will have on their credit score. Debt consolidation can either increase or decrease your credit score. Let’s learn how.
If you fail to make full payments or skip out of debt consolidation payments, your credit score will go down. Additionally, keep in mind that taking out a new loan will likely reduce your credit score temporarily.
Meanwhile, your credit score may in fact increase after consolidating debt. If you show over time that you can consistently make full payments, your credit score will likely go up.
Potential Pitfalls Of Debt Consolidation That You Should Watch Out For
While we have largely painted debt consolidation in a positive light, there are several pitfalls that you should watch out for. Here are a few of the most common:
- Many people actually get themselves further in debt after consolidating their debt. This is because the loans they thought they would be able to repay they actually couldn’t.
- Watch out for how long of a term you will be paying. Although monthly payments on long terms are lower, you will end up paying more in the long run.
- Make sure your personal assets are protected. For many people, their homes, personal savings, or other items will be taken away if they can’t make payments.
- As we mentioned earlier, your credit scores may take a significant dip if you consolidate your debt. This means getting loans and making payments could come with higher interest rates.
Make sure you consider these potential pitfalls before consolidating your debt.
Hopefully, this post has provided you with some valuable insight into debt consolidation. If you are dealing with debt from all angles, consider consolidating your debt. Additionally, for professional help with your debt consolidation, visit Trout Associates.