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Debt Consolidation Red Flags To Know It Is Not For You

January 4, 2019 By editor

If you want to ensure complete freedom from debt, you need to understand what debt consolidation red flags are. These are simply the signs that will tell you if this particular debt relief program is the right one for you.

Sometimes, people force themselves to consolidate debt – only to end up failing at it. They assume that there is something wrong with the debt relief program when in fact, it was never a good match, to begin with. Debt consolidation is an effective way to get out of debt but it is only perfect under the right financial circumstances. You should also have the right personality and mindset to be able to succeed in using this to get out of debt.

To find out if this is the right debt solution for you, it is important for you to spot debt consolidation red flags.

But what exactly are these?

Debt consolidation red flags

There are many signs that will tell you that debt consolidation is not the right solution for your current credit issues. It is actually a mix of your specific financial situation and also your personality and habits. Here are some of the signs that you need to look out for.

You cannot control your spending

According to reports, Americans are feeling confident about the state of the economy. When you are confident about your finances, it will make you bolder and encourage you to take more risks. That can increase the chances that you will use more credit. When you have multiple debts, that is a sign that you cannot control your spending and that is dangerous when you are using debt consolidation.

Consolidating debts can give you a false sense of being free from debt. For instance, if you consolidated multiple credit card balances, that would leave you with several card accounts with zero balance. When you look at that, it would feel like you have already paid off your debts. But the truth is, you just shifted the balance into another account. If you focus on the zero-balance card, you will feel tempted to use it. There is a stronger pull when you cannot control your spending urges.

So unless you are sure that you can control your spending, you might want to think twice before consolidating your debts.

Your income is not enough

Another one of the debt consolidation red flags that you need to look for involves your income. It has to be clear that consolidating debts will not reduce your balance. There are times when it will even increase it slightly (e.g. balance transfer fee). The bottom line is, you still need to pay for the whole amount that you owe. So if your income is not enough to meet your payments, then using debt consolidation might not be the best strategy for you. You may be better off using debt settlement because it involves negotiating with creditors and lenders so they will allow you to pay only a portion of what you really owe.

You do not have a household budget

A household budget is one of the financial habits that can affect your debt consolidation efforts. If you are not using a budget plan that is another one of the debt consolidation red flags that should make you reconsider this debt solution. When you have a budget, you have control over your finances and you can guarantee that your consolidated debts can be paid off regularly. Without it, you can easily forget about your credit obligation.

There is an option for you to get professional help so someone can help you keep track of your payments. Of course, this will be more costly and it might not be something that you can afford at the moment.

How to address these debt consolidation red flags

If you see any of these debt consolidation red flags, you need to be proactive in solving them. Here are some of the things that you can do to solve these issues so you can qualify to consolidate multiple debts.

Put together a budget

Start by creating a realistic household budget. Believe it or not, only 4 out of 10 Americans use a budget. The rest are not making an effort to track their personal finances. If you want to improve your chances of successfully using debt consolidation, you need to get used to using a budget plan. At the very least, this budget will ensure that your debt payments are funded. If you do not have enough money, you can look at the expenses on your budget to see which of them you can remove.

Look for ways to increase your income

Another way to ensure debt consolidation success is to increase your income. One of the debt consolidation mistakes that you can make is to allow your debt payments to put a strain in your budget. This can make the whole ordeal stressful and can compromise your ability to completely pay off your debts. If you cannot make your monthly dues smaller, you just have to increase your income.

You can start by organizing and decluttering your life. Sell whatever you do not need. Use the profit to give yourself some extra money. Or you can take extra shifts at work to earn more. You can talk to your employer to give you more projects to help you with your financial needs.

While the debt consolidation red flags may be daunting, it is not impossible to deal with them. Even if you have these signs, you can overcome them as long as you know what you are doing.

Consolidating Multiple Debts Is More Than Just Combining It Under One Account

January 1, 2019 By editor

Consolidating multiple debts is not just about putting all your balance under one account. There is more to this debt relief program than that. If you really want to maximize the positive effects of this debt solution in your financial life, you need to get to know how it can really affect you.

According to reports, Millennials have an average debt of $42,000 and most of it is credit card debt. On top of this debt, they also have student loans. In the future, a home loan will probably be added to that. All of these debts can be overwhelming unless you decide to use debt consolidation. Monitoring all of these credit accounts can be confusing and there is a high chance that you will make a mistake as you go along. If you want to make your debt payments easier, you need to consider debt consolidation and you need to start on it as soon as possible.

But what can you really expect when you consolidate all your debts?

What really happens while consolidating multiple debts

Obviously, consolidating multiple debts mean you are combining different credit accounts into one. You will open a new one and have its funds pay off the other debts. But if you think that this is all there is to it, you are mistaken. Debt consolidation is so much more than just re-organizing your repayment plan.

Here are a couple of truths that you need to know about this debt relief program.

It still requires you to pay for everything

In debt consolidation, there are no short-cuts or reduction of debt. At the most, you can probably lower your interest rate. This will still help you save money on the overall cost of the debt. That means you need to have enough income to pay for your balance. If you are certain that you need to reduce the debt that you owe because your income is compromised, then you need debt settlement.

It will teach you self-control

Another thing that you can get from consolidating multiple debts is learning how to control yourself – specifically when it comes to your spending. If you think that debt consolidation will make it easy, you are mistaken. There will be a huge temptation to use more credit – especially when you see the zero balance on your credit cards. But what you might be forgetting is the fact that your actual debt is not really paid off. You just transferred it to another account. Debt consolidation can lead you to feel a false sense of debt freedom – which is actually quite dangerous. You need to learn how to counter this feeling by instilling a strong sense of self-control. You have to stop yourself from using your credit cards. If needed, you should keep your cards in a place where you will have a hard time getting it. Even if you are tempted to use it, you do not have it with you so that can help keep you from spending.

It helps improve your credit history

Consolidating multiple debts will also help you improve your credit history. First of all, you only have one debt to pay off each month. That will make it harder for you to forget about your payment schedule. When you are not late and you meet your dues in time, it will make your score rise. Not only that, you also have the option to lower your monthly payments so it is more affordable. When you open the new credit account to consolidate debt, you can request for a longer repayment period. This will distribute your debts over a longer period, thus leaving you with a lower monthly payment.

It makes your life easier

Finally, consolidating multiple debts will help make your life easier. According to reports, those with consumer debt and struggling to pay for it feel higher levels of anxiety and lower satisfaction in life. With debt consolidation, the repayment plan is more structured with a fixed payment. That means it is easier to budget how much you need to put aside for your debts each month. This will help you feel more in control of your debt situation. When you are in control, you can make more confident and smarter decisions.

Important reminders when consolidating your debts

As you try to solve your debt problem, it is important for you to recognize facts about consolidating multiple debts that can compromise your efforts. Here are two of the most important truths about debt consolidation that you should always keep in mind.

Choose the right strategy to consolidate debt

There are many options to consolidate your debts. You have to make sure that you know the right one to use. Among your options include debt consolidation loans, balance transfer cards, debt management, etc. Each of these options is effective but you have to know which one is the perfect choice based on your financial situation. If you have a good credit score, you can use a debt consolidation loan. If not, then debt management or a balance transfer card might be the better option. In case you want a shorter repayment term so you can save money, a balance transfer card is the best debt solution to use. Get to know the options so you can make a smart choice.

Keep in mind that this is just a repayment plan

Finally, you need to keep in mind that this is a debt repayment tool only. After consolidating multiple debts, you still have a long road ahead of you. It is important for you to keep this in mind. Your payments have yet to be made. Now that your payment plan is more structures and simple, you should focus on increasing your debt payment fund so you can get out of debt a lot faster.

It is very important that you do not get the wrong assumptions about consolidating multiple debts. This debt relief program can bring a lot of improvement in your financial life – as long as you learn how to use it to your advantage.

How Consolidating Debts Can Save Your Marriage

December 29, 2018 By editor

Did you know that consolidating debts can help save your marriage?

According to one survey, the majority of the couples who responded said that they carried debt into the relationship. 4 out of 10 said that it had a negative effect on their relationship. It does not matter if you are earning a 6-figure income. The presence of debt, especially one that is starting to go beyond your control can put a strain in your relationship. The more you owe, the more effect it can have on your household finances. If you do not do something about it, that can blow up in your faces and cause enough damage in your marriage.

The reality is, we cannot avoid using credit. Our consumerist society makes sure of that. The most obvious reason is to have a high credit score. You cannot achieve that if you do not use credit. This is why you need to continue using credit. However, you need to learn how to be smart about using it.

For instance, you can use credit cards but make sure that you know how to pay it back. Debt only becomes a problem if you fail to pay your dues.

In case you find yourself drowning in debt, you need to act on it immediately. It will never do you good if you try to hide it from your spouse. It is better for you to come out with it and be ready with a solution that you can propose to use. One of the best options that you have is debt consolidation.

How consolidating debts can help manage financial issues

There are many reasons why consolidating debts can be helpful to your marriage. Since reports reveal that financial problems are the common reason for couples to file for divorce, you need to find a debt solution that will keep the stress away from your relationship. Debt consolidation seems like the perfect choice for the following reasons.

You are encouraged to work together

With any debt solution, you need to communicate with your spouse to ensure that will be dealt with as a team. While there are some people who take care of their individual debts, there is nothing like working together on something difficult to bring you closer. It does not matter if it was only one who was at fault. Sharing the burden will definitely be good for your relationship. Consolidating debts can involve a team effort – especially when both of you combine your credit scores to get a better average. That will help you get a lower interest rate on the credit account that you will use to consolidate your debts.

You do not have to worry about your credit history

Another way that consolidating debts can help your marriage is through its effect on your credit history. This is one of the debt relief options that will hardly have any effect on your credit report. You will still pay your dues – so it should not have any negative effect. You will just be given a more structured repayment plan that is suited to your financial situation.

One of the best things about this debt relief program is the fact that it will be harder to miss out on a payment. You only have one to monitor so forgetting the due date will be easier to avoid. And since you can base your payments on what you can afford, you are most likely going to meet every single one. With a better payment record, you can be sure that your credit score will steadily rise as you pay off your debts.

You get a less stressful repayment plan

Finally, consolidating debts can be very beneficial because it will make the debt payments less stressful. You only have one payment each month instead of multiple due dates. You can also arrange your repayment plan so it is more affordable. All of these will give you a customized payment plan and it will lessen the burden of your debt. You do not have to worry too much – thus improving your disposition. This will give you a more positive outlook that can affect the way you interact with the people around you. Obviously, the one that will benefit from this the most will be your spouse.

Once you have successfully dealt with your debts, you will feel a huge improvement in your life.

Why is debt destructive in relationships

Most people do not understand the real effect of debt in their life. It may help you buy something that you generally would not able to pay in cash – but the repercussions of that to your financial future can be catastrophic. While it may be deemed necessary to use it to maintain a positive credit history, you need to learn how to control it. If you want to have a great future, this is something that you should work on. Otherwise, you will find yourself struggling to make ends meet.

To motivate you to do something about your debts, here are some of the reasons why debt is considered to be destructive in relationships.

It can create insecurities

Some people still feel embarrassed when they have a lot of debts. If you were irresponsible with your use of debt, then that feeling may be justified. Too much debt can be avoided. Even if you were responsible for your financial decisions, the lack of emergency fund can also lead you to acquire a lot of debts. It may be true that it is not as bad as being in debt because of impulsive buying habits. But you have to admit that you are in debt because of a lack of foresight on your part. This is why most people still feel a bit insecure whenever they have debts.

It can shatter trust

Financial infidelity is real and it is also just as painful as being involved in an adulterous relationship. Lying about money can still shatter the trust that you have with each other. If you have individual debts, you need to come clean. Tell your spouse about it – or better yet, tell them before you get married. That way, you can solve the financial issue by getting debt consolidation before tying the knot.

Being transparent with how you handle your finances is also a must in every relationship. A lie can be devastating when discovered. Do not let it ruin your marriage.

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