financial management Archives - Best Debt Consolidation Loans

Should You Help Consolidate Debt Through a Family Loan?

February 15, 2019 By editor

Do you think it is a good idea to help a loved one consolidate debt by lending them money?

This is actually a very hard question to answer. If you really cared about the person asking for money, your immediate response would be to say yes and allow them to borrow from you. However, if you let your head rule over your heart, you would be inclined to say no.

According to a survey, 8 out of 10 Americans will not lead a family or friend some money to start a business. If these people are unwilling to finance a business, what more if the money is intended to be used to consolidate debt? A business has the potential to pay back what is borrowed. Debt, on the other hand, is not as promising. In fact, it shows evidence that the borrower may be irresponsible with the way they handle their finances. If the latter is true, would you really trust that person with your money? What makes you think that they will act responsibly with their money this time?

Why a family loan for debt consolidation can be dangerous

There are many reasons why a family loan is highly discouraged. Even if it will help a loved one consolidate debt, you need to think twice before you agree to help them. Here are three reasons why using a family loan to finance a debt consolidation strategy is not a good idea.

You are not helping them get to the root of the problem

First of all, you are not really helping by providing the funds to pay off the debt. You need to get to the root cause of the problem. Otherwise, your loved one might make the same mistake again and end up landing in debt once more. When done correctly, consolidating multiple debts will do more than just help you get out of debt. It can also make sure that you learn the financial habits that will allow you to stay out of debt. Do not give your loved one an easy way out by providing them with the easy money to consolidate debt. They need to learn how hard it is to pay off debt – that way, they will be motivated to be smarter when they borrow money.

You are endangering your own finances

Another reason why you should not agree to a family loan is that you will only endanger your own finances. It does not matter who is borrowing from you. When you lend money to someone, there is always a chance that they will not pay you back. If you allow them to borrow from you, it is important for you to consider the consequences of not being paid. Will it compromise your financial security? If it will, then that should be more than enough reason for you to say “no” to the person borrowing from you. It will not make sense to save someone’s finances if it will leave your own vulnerable.

You are putting your relationship at risk

This is probably the most important reason to avoid a family loan – you will put the relationship at risk. Money fights are not uncommon among family members. In fact, a survey revealed that siblings have conflicts over money. We also know that this is a huge cause of stress between couples. If you want to preserve your relationship, it is better to just say “no” to that person who is borrowing from you. This will help you avoid any feelings of resentment when that person ends up not paying you back.

Of course, you may be thinking, saying “no” can also destroy your relationship. The person asking help from you will feel resentment because they will feel like you abandoned them in their time of need.

The truth is, you are not encouraged to give a family loan to help consolidate debt. But that does not mean you will not help. You can still provide help and it does not even have to involve money.

How to help loved ones consolidate debt

There are three ways for you to help a loved one struggling with debt. This might even be more beneficial than lending them the money that they need.

Educate them on what they should do

One way to help is to give them debt consolidation lessons. Even if you do not know a thing, you can learn with them. Find out what the options are and help enlighten them of the best choice based on what they can afford. You might want to look beyond the options to consolidate debt. You can also look at their financial situation and identify areas that they can improve. If they do not have a budget plan, you can help them create one. Point out mistakes that might compromise their ability to completely pay off their debts.

Teach them the right financial habits

Giving them a list of the financial habits they can learn is also another thing that you can help them with. If they think that you have the money to lend them, that means you are good enough in managing your finances that you ended up with extra money in the bank. Teach them how to accomplish that. Give them tips on how you manage your money and that might be the key to help them avoid too much debt in the future.

Give them emotional support and encouragement

Finally, you can simply give them your emotional support. Believe it or not, this can go a long way. Be the voice of reason in their life. Work closely with them as they pay off their debts, making sure that the right decisions are being made. When they are feeling discouraged, give them the motivation that they need to keep going. Remind them of why they need to keep on paying and stop them when they are about to make things worse. As you go through every step with them, it can possibly bring the two of you closer. That is more valuable than the money that you could have lent them to consolidate debt.

How Financial Management Can Help Make Debt Consolidation A Huge Success

February 6, 2019 By editor

The best way to guarantee debt consolidation success is through proper financial management. It does not matter if you are earning enough to cover your monthly payments. If you do not know how to manage it, you will still be putting your finances in danger.

When you are considered to be good at managing your money, that means you know how to use it properly. You make decisions based on what will improve your finances. You always think ahead to ensure that your financial future will not be compromised. At the same time, you know how to balance your spending so you have enough to enjoy at present.

Being in debt does not mean you are bad at managing your finances. However, if you are having a hard time keeping up with your debt payments, that means you have failed at financial management. Even if you have chosen debt consolidation to deal with your credit situation, that will not be enough if you do not learn to manage your money wisely.

How good financial management guarantees debt relief

How exactly does financial management help make your debt consolidation program a success?

There are three ways that it can assist you in guaranteeing debt freedom.

Organizes your finances

Debt is sometimes a result of your failure to organize your finances. When your finances are organized, you become more in control of it. You understand how much comes in each month and how much you spend. That is only possible if your finances are organized.

The easiest way to organize your money is through a budget plan. This plan shows your income and lists the various expenses that you fund each month. Through budgeting, you can easily manage your money and ensure that your debt payments will always be prioritized and funded.

Encourages you to keep an eye on spending

Good financial management can also guarantee debt relief because it encourages you to keep an eye on your spending. Even if you have a budget plan, knowing how much you are spending out of your income is not enough. You need to know where it is actually going. Sometimes, people fall short and end up borrowing money because they failed to pay their priority expenses. After they receive their income, they end up using it on unnecessary expenses. When the due date of their priority expenses come around, they no longer have the money to pay for it.

This is very important when you are in the midst of consolidating your debts. It will help guarantee that you will always have enough funds to pay off your debts.

Aims for financial security

Being in debt will not make you feel financially secure. However, that does not mean you can just leave things as is. If you implement proper financial management in your life, you can make your finances more secure. Every payment made will contribute to the increase in your personal net worth. If you want to pay off your debt faster, you need to manage your money so you can maximize your monthly payments. The faster you pay it off, the closer you get to debt freedom. When that happens, you strengthen your financial security – which will lead to a better future.

These are the three ways that financial management can help ensure that you will really achieve debt freedom. But the best part about this is you will also develop the habits that you can continue using to keep yourself out of debt.

3 financial management habits that will sustain debt freedom

We all know how hard it is to achieve debt freedom. It is not an overnight thing that you can accomplish. It will take time and a lot of self-control to accomplish this feat. But once you have successfully paid off your debts, that is not the end of it. You need to learn how to sustain the newfound debt freedom that you got.

There are many habits that will make you a great manager of your finances. Among all of them, there are three basic habits that you should never forget to implement in your life.

Budgeting

Budgeting is for everyone. It does not matter how much you are earning or if you have debts or not. You will always benefit from using a budget plan. When you religiously use this plan, it is easier for you to stay in control of your finances. You will know the monthly transactions of your money and you can decide on whether you will keep on paying off certain expenses or not. You can also decide if you can increase funding for a certain expense. If you have a new financial goal, your budget plan will help you reorganize your spending to accommodate it.

Smart spending

According to reports, 5 out of 6 Americans have admitted to succumbing to impulsive buying habits. 20% of them even admitted that they spent more than $1,000 on a whim. This is dangerous in so many ways because it can quickly leave you in debt. Even if you use your savings to make the purchase, one emergency can force you to borrow money. If you really want to sustain the debt freedom that you worked so hard to achieve, you have to make sure that you can be smart with your spending.

Take note that smart spending is not just about living within your means. It is making sure that your money is spent on things that will eventually improve your financial situation.

Saving

Finally, saving is an important financial management habit that you need to retain. Life is unpredictable and it can also be costly. If you are not prepared for unexpected expenses, you might end up borrowing money to survive an emergency. Fortunately, more people are more prone to save nowadays. Reports reveal that 59% of people admit enjoying saving more than they do spending. This is a good habit for people to have. If you think that you cannot save more because of your debt payments, do not be fooled. It is possible to do both. Even if your savings are small, it does not matter. It will grow over time. You just have to be consistent in your saving efforts.

Budgeting Tips When You Are In The Midst Of A Debt Consolidation Program

February 3, 2019 By editor

If you are in the midst of a debt consolidation program, certain budgeting tips can help you be successful at it. You have to keep in mind that this debt relief strategy is a tool that will make your debt payments easier. The end result of debt consolidation will leave you with the same amount of credit. The payments are yet to be made.

This is the reason why having a budget plan is important. You want to make sure that your finances can keep up with your debt payments and all the expenses that you have to meet. Having a budget will give you an overview of your income and expenses. When you understand your specific financial situation, you can make better decisions. This can be very handy especially when you are in the midst of a debt relief program.

Important budgeting tips while consolidating debts

The truth is, budgeting tips are always welcome regardless of your current financial position. Whether you are saving up for something, paying off debt, or just managing your day-to-day expenses, a budget plan will always make things clearer and easier to deal with.

Based on a survey conducted by TransUnion, when Americans cannot afford to pay all their bills, they end up prioritizing the wrong ones. Obviously, financial literacy will play a role here but having a budget plan will also help. Your plan will list all the expenses that you pay for. They are all there listed together – making it easy for you to compare which of them should be prioritized.

When you are using debt consolidation as your strategy to solve your credit issues, you will benefit from using a budget plan to help pay off your dues. There are three important budgeting tips that can specifically work in your favor.

Organize everything

This will help put things in perspective. Budgeting is meant to help you organize your finances. This is why you need to make your budget plan clear and organized too. Make sure your expenses are grouped by category. The categories can be food, utilities, debts, rent, etc. Do not allow them to be jumbled in one list. When you have them organized, you will feel more at ease. You will have a lot of revelations about your finances and how you are spending your income. These realizations, hopefully, will help you come up with a plan that will filter the expenses that you can stop making so you can have a bigger debt payment fund.

When you organize your budget plan, take special note of the annual, semi-annual, or quarterly due dates that you have. Take these into consideration because these can compromise your debt payments.

Know your priorities

The next of the budgeting tips that you need to focus on is prioritizing your expenses. After you have grouped your expenses by category, rank your expenses according to importance. Ask yourself, what are the things that you cannot live without and those that you can stop spending on? When you prioritize, it is easier to identify the expenses that you can let go of. In case something happens and you find yourself unable to pay off everything, you know the expenses that you can cut off.

Constantly review your budget

This is probably the most important among all the other budgeting tips. You have to always review the budget so you are sure that it is aligned with your current financial situation. As you pay off your debts, the balance will go down slowly. This may or may not change your expenses. Sometimes, we have new expenses, other times we get rid of old ones. There are also instances when it is our income that changes. You have to ensure that your budget reflects these changes so you can adjust the movements of your finances accordingly. Doing so will allow you to maximize the changes in your finances. If you have a higher income or lower expenses, you can probably use that to increase your debt payments. That will help you achieve debt freedom faster.

Why a budget plan is important during debt consolidation

According to reports, those who earn less than $75,000 a year is less likely to have a budget plan. This shows just how many people are trying to wing it without budgeting their finances. This can be really dangerous especially when you are in the midst of a debt consolidation program. There are two specific reasons why a budget plan is a must when you have chosen this debt relief strategy.

Ensures your debt payment is funded

First of all, it ensures that your monthly debt payments are funded. As mentioned, when you organize your budget, it will show a list of all your expenses. Make sure that you put your debt payments on top of the list. That way, it will not be compromised when your finances are running low.

Allows you to stay in control of your finances

Since a budget plan gives you a general view of your finances, it is a great way to stay in control of your finances. Sometimes, it is fear that keeps us from grabbing financial opportunities like debt consolidation. With the knowledge that you have, you can make more confident decisions. You will know when it is okay to take risks and when it is not. If you are faced with an unexpected expense, you know how much you can afford to pay without compromising your priorities.

Now that you know about these, it will make sense for you to search for the best budgeting tips that will allow you to maximize the effects of debt consolidation. If you do this the right way, you will not just get rid of debts. You will most likely develop the right habits that will allow you to improve your financial position even further.

Need Help With Debt?

Free Debt Relief Quote - Mobile

Need to Talk?