Money is a sensitive topic but one that you will need to address at some point in your life. If you are living paycheck to paycheck or feel like you can’t get ahead financially, you could be in financial trouble. The first thing you have to do is figure out how much money is coming in versus the total amount going out, this is budgeting 101 but sadly the majority of us are not taught budgeting at home or in school.
Itemizing Your Budget
You have to list each and every debt you have and how much interest is being charged. This information is vital if you need to have a debt consolidation knowing who you owe and how much is owed is vital. When you have established your total debts, the next step is listing all of the income you have coming into your home each month. After you have established your total income, subtract all of the debts which should provide you with a clear answer on whether you are financially stable. If after paying all of your debts you don’t have enough cash to pay for basic necessities or you have to live off credit cards, then you should consider having your debts consolidated as soon as possible.
Benefits of a Debt Consolidation
There are numerous benefits when you consolidate your debts but due to time constraints we will focus on the primary benefits.
· You only have to focus on one payment a month. Instead of trying to keep track of all your debts and getting hit with late payment fees. By having your debts consolidated into one payment, you will be able to pay it on time and avoid late payment fees.
· Reduced interest rates. When you engage the services of firms that specialize in consolidating debts for consumers, they will be able to get you a lower interest rate than the one you are currently paying. Creditors do not want you to default on your obligations so they are willing to take a lower rate of interest in exchange for being paid on time. The interest savings alone are worth consolidating your debts.
· Regain peace of mind. This is an intangible but if you are living paycheck to paycheck, you know how stressful it can be to have debts hanging over you. When you consolidate your debts, you have a plan to repay them and that will give you a sense of confidence and a goal to strive towards. With each payment you are one step closer to being debt free and that is something that everyone wants.
The first step is reaching out to firms who specialize in consolidating debts and having them work out a repayment plan that makes sense to you and your creditors. During this repayment phase you may need to sacrifice some luxuries but it will be worth the trade-off when you come out debt free once everything has been repaid.