If you are having a hard time with debt consolidation concepts, you might want to take a look at your kids. There are a couple of lessons that you can learn from them – if you know what you are looking for.
With the financial education in schools taking a back seat, parents have to take a more active role in teaching their kids about personal finances. However, it is also important to realize that even the adults are having a hard time – especially when it comes to debt. Obviously, kids would rely on adults to learn about money. But there are also times when they can also pick up a thing or two when they observe their kids.
Most of the time, the financial struggles that adults deal with revolve around debt. To be specific, their problems stem from the fact that they have a hard time paying off debts. It is not like there are no debt relief programs that can help. It is more of the fact that some of them do not understand the main concepts of these debt solutions.
The truth is, these debt relief options are not really hard to understand. Debt consolidation is actually quite logical as long as you know the main concepts that define it. Fortunately for you, there are many places you can look into if you want to understand it better. In fact, looking at your kids will probably help you get to know debt consolidation concepts a lot better.
Consolidation lessons you can get from your kids
The idea behind debt consolidation is quite simple. You get a loan or open a new credit account that will help you pay off your multiple debts. While that is a logical move, some people do not get how it is beneficial to use debt to pay for another debt.
To help convince you that it is good for you to use debt consolidation, look at what your kids are doing. These are usually life lessons that you teach them but you might be surprised that it can teach you a thing or two about consolidating debts.
Putting all the toys in one place keeps things organized
This is probably one of the first things that we will try to teach our kids. Their toys are the first possessions that they will recognize. Naturally, we want them to feel responsible for it. Thus, we teach them how to put it away in one place and keep it organized.
That is one of the most basic debt consolidation concepts that you need to learn. It may seem ridiculous to use debt to pay for another debt – but if it is done to organize your multiple credit accounts, then it will make sense. Just like the toys of your kids, placing your debts under one account will make it easier for you to take control of your credit accounts. You only have to monitor one and it will be easier for you to focus on earning more money so you can pay off your debts faster.
Losing a toy is more likely to happen if you have too many
Another one of the debt consolidation concepts that you can learn from your kids is that being organized with toys will keep them from losing it. Since they only put it in one place, they know where to look for the toy that they want to play with at a particular time.
In the same way, debt consolidation can keep you from losing track of your debts. When you have a lot to track, it is easy for you to miss out on a payment – especially if your accounts have different due dates. Even if you set up reminders, it takes a lot of effort to monitor everything – making sure you have sufficient funds to pay off your dues. If you want to avoid overlook your payments, you might want to consolidate your debts.
Difficult lessons will need adult supervision
We encourage our kids to ask for help when they are doing something difficult. Since they lack in experience, it is best for them to go through certain tasks with adult supervision – to make sure they are guided accordingly.
You can assume the same thing about debt consolidation. If you do not understand it and you have no idea what you should do, you have to approach a professional to help you out. There are certain realities about consolidating debt that you need to be careful with. If you end up using it incorrectly, you might end up making things worse.
At the very least, you need to ask what you should do. Once the options available are explained to you and you understand it perfectly, then you can try to do it on your own. But if you are not sure how to consolidate debt, then go to a credit counselor. There are non-profit organizations who can provide free counseling services. Take advantage of these.
How debt consolidation concepts differ from the rest
As you can see, debt consolidation concepts can be associated with even the usual lessons that you teach your children. But of all the things that you need to learn about it, there are two important things that you need to remember.
No debt reduction
First of all, this debt solution will not reduce your debts. It will only combine it under one account. You will still owe the same amount. According to reports, consumers have staggering amounts of debt – with those between 35 to 54 years of age having more than $130,000 in debt. If you cannot afford to pay these off, you need to consider other debt solutions that can help you reduce your overall balance – like debt settlement.
Only the payment terms change
Another thing that you need to remember is that only your payment terms will change. It includes your interest rate, payment period, fees, charges, etc. When you open a new credit account, make sure you choose the right loan or credit card that will give you the best payment terms. If you choose correctly, you can maximize the savings that you can get from this debt solution.
Consider all of these debt consolidation concepts to ensure that you will only benefit from it. While it is effective, you need to have the right financial situation. If not, you might end up wasting your time, effort, and money because you pursued the wrong debt solution.