Consolidating debt is a term we all hear quite often. It’s something that’s promoted by the big banks, accountants and practically anyone involved in the finance industry in some capacity. Although some financial institutions might be using debt consolidation to try and get your business, it’s a very positive idea regardless.
We’ll take a look at some key reasons why you should seriously consider consolidating your debt in this article. It could be the decision that helps improve your financial situation so you can breathe easy once again.
1 – You Can Lower Your Monthly Payments
If you’ve ever asked yourself the question, “What is a Debt Consolidation Loan and what are the advantages of getting one?”, one of the top answers is it will reduce the amount of repayments you have to make on debts per month, week or fortnight. It’s an Australia wide loan that can really save you financially.
The biggest problem with multiple debts is being able to cover all the minimum repayments. If you have two or more debts, whether they be loans or credit cards, it can really become hard to manage. Consolidating that debt into one simple loan reduces those repayments, possibly even by hundreds of dollars or more per month.
This is especially the case when it comes to credit cards, as the monthly minimum repayment is generally quite high. An instant cash loan that consolidates that debt into one simple payment simplifies things remarkably.
2 – Reduce Your Financial Stress Levels
Next to health issues, one of the greatest causes of stress in life is money. Or, more to the point, a lack of it or mismanaged funds. The modern world completely revolves around money. You simply can’t do much without it.
For this reason, when a person gets snowed under too much debt, they typically reach a crisis point as far as emotions are concerned. Suddenly every waking thought is fixated on money, how to get more, what the future holds and if there is any hope of digging themselves out of a financial hole.
Debt consolidation, although it doesn’t eradicate debt, certainly helps to ease that financial burden, delivering repayments in more manageable and digestible chunks rather than constant bills coming in the mail or through email.
What price can be put on peace of mind? Debt consolidation is designed to ease the stress by reducing those money woes.
3 – Slice Dollars Off Your Monthly Interest
Credit cards are one of the biggest culprits when it comes to paying high rates of interest. If you have a number of credit cards with a balance on them, you could be losing a lot of money in interest that you simply don’t have to lose.
A debt consolidation loan can reduce that overall interest by quite a significant margin. Let’s say you have 3 credit cards that are set at 18% interest and you consolidate those cards into one loan instead that has an interest rate of 12%, for example. Technically, across the 3 credit cards, you’re reducing your monthly interest by 18%.This is a reduction of 6% per card, which technically gives you a total saving of 18% in interest across all 3 cards.
That’s going to equate to a massive monthly saving. It’s far better to have that money back in your own pocket.
4 – You Can Create a Monthly Household Budget That You Can Stick To
Formulating a budget that both displays and divides up your weekly or monthly household expenses is one of the simplest, yet most effective ways of managing your personal finances. Not only does a budget give you a plan to follow, but it also serves as a constant reminder to keep an eye on spending.
When you consolidate your debt, reduce your interest and how much you have to spend in repayments, it frees you up to create a budget where all bills are covered and you still have some money left over for the fun things in life.
5 – Have More Disposable Income
Once you’ve consolidated your debt and now have a handle on your financial situation, you’ll have more disposable income to get out there and enjoy what you love to do. You don’t want to just survive, you want to thrive, so think about consolidating your debt, free up your finances and free up your life.