If you are wondering if debt consolidation will really solve your debt problems, the answer to that is yes. It can be an effective way of getting out of debt but you have to know that it is only one part of the equation. We will discuss that later on and for now, let us dwell on how it can be your ticket out of your credit obligations.
First of all, debt consolidation will allow you to make a single monthly payment even if you start off with a lot of creditors. If you choose debt consolidation loans, you will use it to pay off all your other debts so you are only left with this new loan. With debt management, you will make a single payment to the debt counselor handling your account. They will take care of distributing that to your various creditors. This will make your payments more convenient so you can concentrate on growing your funds. The more funds you have for payments, the faster you can get out of debt – or at least put it on the fun things that you do not want to eliminate from your life.
Another benefit on debt consolidation is the lower monthly dues that you have to pay for. This will enable you to keep up with payments and have extra to grow your reserve fund on the side. The latter is very important because having enough cash for emergency situations will keep you from missing payments or putting yourself further in debt just to get out of a tight fix.
Ideally, you want to have a low interest rate on your debt and this is something that debt consolidation will try to achieve for you. In debt management, the counselor will try to negotiate with the creditor to lower your rate as long as you stay true to your payment plan. In debt consolidation loans, you will target a loan that has a lower interest rate than your current average. This can be done through either a good credit standing or a collateral.
If you have none of these, then you can very well expect that debt consolidation may fail you. But if you have them all, then your chances of getting out of debt is very high. But going back to what we discussed in the beginning, paying for your debts is only one part of the equation. The other part involves your attitude.
Even if the concept of debt consolidation can get you out of debt you need to make sure that you are fully committed to it. If not, all your efforts will fail. Or you can get yourself out of debt but if you do not correct the practices that got you there in the first place, you can find yourself in another debt situation. You need to go back to the root of the problem so you can correct any habits that will make you fall in the same pit again. Have the right attitude towards your debt problems will get you to focus not just on paying it off, but in making sure that you will stay debt free for the rest of your life.