How to Simplify your Debt Consolidation
Debt drags you down–and the longer you ignore it, the deeper you’ll go. High interest rates keep adding more and more to your balance over time, so if you don’t address debt immediately, you end up with a lot more to deal with. Fortunately, debt consolidation allows you to combine all your debts into a single loan with lower interest rates, so you can pay it off without worrying about accruing insane amounts of interest to go with it.
How Debt Consolidation Works
Taking on debt to escape debt might seem a bit odd, but debt consolidation makes a lot of sense. After all, the lower interest rates are on your debt, the less you’ll pay over time. So if you’re paying 25% interest on several credit cards, and transfer the balance of those to a 12% loan, you’re cutting your interest liability by more than half as long as you continue to repay it quickly.
Do You Need to Consolidate Debt?
To decide if you need debt consolidation, ask yourself these questions:
1. Are you carrying a balance on multiple credit cards and paying high interest?
2. Do you buy things and put them on credit when you couldn’t afford them in cash?
3. Are you unable to pay your bills some months?
4. Do you open new credit card accounts when your other ones reach their limits?
5. Have you received calls from collections agencies?
Any of these factors might mean you have a credit problem. Debt consolidation can help you get out of that cycle faster than you would be able to otherwise.
How to Start Consolidating Debt
First, you need a complete picture of how much debt you’re carrying. Total up all of your credit cards, private loans, etc. Then, develop a budget. Cut any recreational or luxury expenses until the debt is gone. Finally, speak to a financial advisor at a bank, who can help you apply for a consolidated loan.
The Best Anti-Debt Strategy Is Prevention
Obviously, the ideal thing to do is to avoid getting into debt in the first place. Or, if you have had debt problems in the past, pay them off and be intentional about avoiding them in the future. Be frugal to save up an emergency fund that you don’t touch unless you absolutely need it. Cook your own meals instead of eating out, buy older cars and technology, and focus on saving for your future.
Contact Ironhorse today to discuss more options for personal loans!