Consolidating debt successfully is not really complicated. The concept and the steps to make it work is very simple. However, it does require consistent effort. You will be paying off the whole debt since there is no reduction of balance. This is probably why some people hesitate to use it to get out of debt. If you are quite lazy when it comes to managing your finances, this can be challenging to complete.
This is actually unfortunate because debt consolidation has a lot of perks. It can be very effective in improving your financial situation. It is not like the other quick fix debt relief programs but it can still get you out of debt while helping you save money and improving your credit score.
According to reports, Americans have an average of $6,506 in credit card debt. In most cases, these cards are used to pay for basic necessities. This includes rent, food, and utilities. Other credit card owners use it to pay for medical bills. With the cost of living continually rising, it is not surprising that a lot of people have accumulated a lot of debts. After all, using credit cards to pay for expenses is actually very convenient. It will cost you more because of the high-interest rate, but the convenience is a huge motivation to keep on using it.
Of course, that does not mean you should not do something about your growing credit card debt. Even if you are feeling lazy in dealing with your debts, you have no choice. If you want to keep your financial future secure, you might want to consider consolidating debt successfully.
Why consolidating debts is easier
There are three reasons why consolidating debts can be easy even for the laziest individual.
One monthly payment
When you consolidate your debts, you will be putting all your balance in one credit account. This means you will be paying only one account instead of monitoring several payments each month. It will simplify your efforts and will make it more convenient to keep up with your debt payments. If you are feeling too lazy to monitor your debt progress, consolidating it will make the task easier to accomplish.
Lower interest rate
Another benefit of consolidating debts successfully is getting a lower interest rate compared to what your original debts have. This will effectively help you save a lot of money. With the average credit card APR at 17.73%, the interest amount that you will pay will almost be the same as your principal balance. At least, this is true if you pay only the minimum amount on the debt.
Of course, some people cannot afford to pay more than the minimum. If this is your case, consolidating the high-interest debts will do you well. This is especially true if you get approval for a low-interest loan to consolidate everything that you owe. You can choose a lower monthly payment. This will make your progress slower but it will still save you money since you now have a low-interest loan.
Convenient repayment plan
Finally, consolidating your debts is a good idea for lazy individuals because you can restructure your repayment plan according to what is convenient for you. If that means having a lower monthly payment, then make sure your debt consolidation loan has that. If you want to get out of debt faster so you no longer have to worry about debts, you can also have that arranged.
Steps to consolidating debt successfully and effortlessly
Of course, lazy individuals who want to get out of debt are concerned about how long it would take to pay off their balance. Consolidating debt successfully will take time to finish. After all, there is no debt reduction in this debt solution. You have to pay for everything and that can take some time to complete. It will be longer if your credit card habits lead you to a significant amount of debt.
Fortunately for you, consolidating debt successfully involves three simple steps that are very easy to follow.
List out all your debts
Start by making a list of all the debts that you owe. This is a great opportunity for you to organize your finances and see where you really are in terms of your personal finance. It will allow you to analyze how much you need to pay off so you can get the information you need for the next step.
Apply for a debt consolidation loan
Once you know how much you need to pay off, it is time to get a debt consolidation loan approval. This is a low-interest loan that you will borrow specifically for consolidating debts. If you have a good credit score, you can expect the lowest rate for it. This will help you save a lot of money especially if most of your debts are high-interest credit card debts. Make sure that the loan is approved and have paid off your debt before you really stop paying your original debts. This is to ensure that there is really nothing left of the original credit accounts before you stop sending payments.
Set up automatic payments
After the debt consolidation loan is used to pay your original credit debts, it is time to focus on this one debt. If you are even too lazy to take care of this one debt, you can just automate it. That way, you will never miss a payment. You want to ensure that your debt payments are connected to an account that will always have funds. This could be the account where your income is deposited by your company. While the payments will be automatically sent to the lender, it is still your job to ensure that it is funded. Surely even the laziest person can do this.
When you have set this up, you can just relax and watch as your debts are paid off. With everything automated, you can focus on earning more money so you can improve your financial situation significantly.