Debts can be the worst, especially if you do not have a proper plan to pay them off. It all seems like an endless and very vicious cycle, right? So I’m here to offer a solution, one that could actually work, and will have you well on your way to financial freedom. Two solutions actually.
Ever heard of debt consolidation? That’s the first. Second, have you ever considered working from home? Actually sitting in the comfort of your house, at your desk, or even sofa, probably in your peejays, and earning an income? Well then, this article is most definitely meant for you.
What Is Debt Consolidation?
Debt consolidation, put in simpler terms, is the act of taking one loan to repay all your other loans. Basically, you add up all your existing loans, and take out another one to repay them all, with lower interest rates and an increased repayment period.
When Should You Start Thinking About Debt Consolidation?
If you have a lot of loans from different lenders, you might want to consider debt consolidation to cover you. Now, before opting for it, there are a few factors that you should consider and have in check.
• If You Have A Good Credit Score
Before you get into debt consolidation, you should make sure your credit score and standing is at a good place. This means that your loan repayment history has been good throughout in order for the person entrusting you with this new loan to trust you.
• If Your Income Is Stable.
Your income should be stable enough for you to prove that you will be able to repay this fresh loan. This is also for your own good, not just the creditor’s, because it will ensure that you will still be stable even after paying your loan.
• If You Have A Solid Repayment Plan In Place.
You need to have a proper plan of how you will offset your loan. Whether from your pay check, or jobs that you do on the side. If it is web service, advertising and marketing, internet and telecom, you need to know how you will pay off your loan, and in what intervals.
• If Your Spending Habits Are Disciplined.
Loan repayments require quite a considerable amount of self-discipline. You literally cannot afford bad spending habits, like shopping sprees, random vacations and binge drinking. You need to check yourself, and even come up with a budget for your spending.
Why Is Debt Consolidation Important?
Debt consolidation offers a much better repayment plan for your loan. First of all, instead of worrying about how to pay off various lenders and having to endure the endless calls from collectors, you can now just focus on one. It helps you offset your loan sooner, since you now have a clear understanding and mental grasp of it. It also gives you a longer time to get your funds together and pay back your debts. The advantages of it will be explained below.
Advantages of Debt Consolidation.
• It will stop the numerous calls from collectors.
• It will give you a tax break.
• It will improve your credit score, if you repay on time.
• Having one loan instead of numerous ones will make it easier for you to focus on repayment.
Disadvantages of Debt Consolidation
• The extended pay period might end up increasing your interest, so you end up paying more.
• In the event that you do not repay on time it might negatively affect your credit score.
• It might reduce your credit, plus shorten your terms and reduce benefits.