Having a debt consolidation plan can really help you move in a more structured manner. We all know that getting into debt is much easier than paying it all off. Sometimes, when you have accumulated a lot of credit accounts, it can be confusing to deal with all of them at the same time. You might end up forgetting a due date or mixing up payments. Having to juggle a lot of things at the same time can also be very stressful.
This is the reason why consolidating debts can be very helpful at the moment. If the latest debt statistics are to be taken into consideration, it can be assumed that a lot of consumers are in dire need of debt relief help. Apparently, almost all types of debt, credit card debt, mortgage, student loans, and auto loans, reached an all-time high in 2018. Personal loans, although it was not clear if it reached a new high, is considered to be the fastest-growing debt during the same year.
All of these can be quite disconcerting for Americans. Imagine having to deal with your multiple debts, basic expenses, and the stress of earning enough money to cover all of that. If something unexpected happens, it can easily throw you off.
If you want to successfully deal with your credit situation, This is where a debt consolidation plan can make your life easier.
Qualities of a successful debt consolidation plan
Huge amounts of debt, especially credit card debt, can ruin your financial health. But if you follow your chosen debt relief plan carefully, it should help bring you closer to an improved financial position. Of course, to ensure that it is successful, the plan has to have all the right qualities.
Here are the important qualities that will guarantee the success of your debt consolidation plan.
First of all, you have to make sure that everything is realistic. Sometimes, in our haste to get out of debt we fail to consider how much you can really afford. We set really high debt payments and we end up making our lives miserable because it is so hard to reach. This will just make the whole ordeal even more stressful. When you are creating your debt consolidation loan, you need to be honest about how much you can afford to pay each month. Do not exhaust your resources because that will make it harder to stick to the plan. When that happens, you might fail at getting out of debt. And if something unexpected happens, you might just land in another debt pit that is harder to get out of.
Aligned with your lifestyle
Another quality of a debt consolidation plan is making sure it is aligned with your lifestyle. To do that, you need to check your budget plan. The way you spend your money is a reflection of your lifestyle. If your debt relief plan considers your lifestyle, it will be easier to commit to it. You will create it in such a way that will work well with your lifestyle expenses. If it turns out that your lifestyle is causing your debt, then you need to make changes and incorporate it while you are in the midst of a debt consolidation program.
Finally, the debt consolidation plan that you will create should be flexible. This is especially true if your repayment plan will take years to complete. A lot of things can happen over that time. Your debt consolidation program might no longer be affordable because events in your life changed your financial priorities. You may be able to pay it off before but if you are living from paycheck to paycheck now, you might have a harder time meeting your debt payments. You need to be able to change your repayment plan so you can continue to commit to it.
What should your debt consolidation plan show
Apart from the qualities of a great debt consolidation plan, you also have to know the right elements that should be displayed in it. According to reports, 2 out of 10 Millennials in debt are resigned to the thought that they will die with debt. While being debt might seem like a hopeless situation to be in, it is not irreversible. There is always a way out of debt. And it all starts with a plan.
Of course, that means having an effective plan, to begin with. Here are the important things that should be included in your debt consolidation plan.
Accurate consolidated debt details
Obviously, you need to have the details of your consolidated debts in the plan. What is important is that it should be an accurate representation of your debts. This will help you understand what you are up against. Make sure the list includes the amount you owe, the interest rate, interest amount, fees, and the due date.
Affordable monthly payments
Your debt consolidation plan should also show how much is expected of you each month. Before you finalize the monthly payments, make sure you consult your budget plan first. This will give you an idea of how much you can really afford. It will make the plan more realistic and easier to commit to. The chances of completing the plan will be higher.
Length of the repayment period
Finally, the debt consolidation plan should show how long it will take for you to complete your payments. Will it take you months or more than a year to completely pay off your debts? Remember that the longer it takes for you to pay your debts, the higher amount will be paid towards the interest. If you cannot afford to pay bigger amounts each month, that is okay. At least, the plan that you have will show you how long you have left before you are completely done with your debts.