Consolidate Debt – A Pain or A Painkiller?

We are living in a time when most people are trying to save a cent wherever they can. It is also a time when many are trying to consolidate debt that they have incurred during previous, more prosperous years. However, some consider it too much work to go through the process, and it’s just not worth it.

While it is true that it takes both time and effort, debt consolidation might be the answer to your financial headaches. Let’s look at some of the benefits:

1.    Instead of having several loans to pay at the end of each and every month, you only have to pay one. This will save you a lot of time and effort. You don’t have to keep track of various due dates or minimum balance requirements. This means less to worry about.

2.    Since you now only have one account to pay every month, it will be much easier to draw up a comprehensive budget, and it will be easier for you to plan your finances. When you have several loans to pay during the month, it’s very likely that they have very different due dates. So one or two loans must be paid the first week. Some the second week, and yet some others the third week.

This means that the money that is reflecting in your account is not really yours. It’s definitely not yours to spend as you wish, because you have loans to pay, and you need to make sure there is enough money left.

With all your accounts consolidated into one account, you pay it once, and then you are done. The money that is left in your account is yours to spend as you please.

3. One major benefit is the fact that the interest rates are half to one-third of the interest charged on revolving credit card accounts. The difference between the two is that your debt consolidation loan is a secured loan (home loan) and not an unsecured loan (credit card, personal loans, etc). This will mean a great reduction in interest rate and longer loan terms. The result will be lower monthly payments, which means you will be able to work with cash instead of credit in your daily life.

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