Spring clean your finances with debt consolidation

Consolidation is one way to rid yourself of your debts quickly by combining all your current outstanding loans and liabilities – and their generally outrageous interest rates into a single loan with a lower interest rate. Instead of having to pay a number of different lenders each pay period, a consolidation loan will leave you with one lower interest loan to service, allowing you to pay down your debt quicker.

Identify your debt load
This is where you have to face those unopened statements and bills. Calculate total debt owed to family and creditors and identify which debt has the highest interest rates.

Find out what you’re actually spending your money on and determine how much you need to pay it all off. Despite how bleak this amount may seem, you can call us if you need any help creating a plan. bankruptcy is rarely the only choice for people in financial distress, and for many creditors servicing the debt might be a better option.

Create your budget
Decide how much you actually need for daily life, fun, savings and to service your debt repayments. You will probably find out that you’ll have to cut out some of the luxury items in your budget until you get your debt in order.

Get your consolidation loan
Apply for a loan to consolidate your debt.

Pay off your debt
Start by paying off your highest-interest debt first. If you have a lower-interest loan that is causing you more emotional and mental stress than the higher interest ones (like a personal loan that has stretched family relations), you may want to start with that one instead.

Stick to the plan
Consolidation only works to free you from debt if you stop overspending once you pay off your cards. Once you pay off one set of debts, move the payments to the next set in a waterfall payment process until all of your bills are paid off. Once you are debt free, you can move those payments into savings or investments.

Last Resorts
Family loans
If you go this route, write up a contract with your family including payment dates, when the loan will be paid off, and what the consequences will be if payments are missed (added interest, etc.)

No need to hit rock bottom
You don’t need to hit rock bottom before you can start to rebound from debt. Nipping your debt in the bud before you face emotional and financial bankruptcy is the best option, and consolidation is a tool to help you avoid bottoming out. If you can budget and save before you shop and spend, your foundation for a healthy financial life will be set.