Managing Your Debt Through Consolidation: Where to Start
Debts can pile up in the blink of an eye. It can be due to credit card debts, payday loans, medical bills, college tuition or a combination. Whichever the cause, if left unattended to, the problem can escalate to agonizing levels.
Skipping payments can inflate your initial debt. To make matters worse, the late fee payments and interest rates will pile on the principal amount, thus making it more difficult to bear the increasing debt burden.
At this point, you may feel like there’s no solution. However, you can use various methods to salvage the situation. One of the common methods is through debt consolidation.
To consolidate means to combine. Therefore, debt consolidation means combining debts (multiple) into one debt. This leaves you with a single debt to take care of. It’s simpler to focus on one debt than to attend to multiple debts.
In fact, having numerous debts leads to forgetfulness which can turn out to be expensive in the long run. By consolidating your debts, you’ll only have one monthly payment to make. In addition, you’ll benefit from low interest rates while avoiding late payment penalties and other charges since there’s a single payment to make.
Where to Start with Debt Consolidation
Before diving into the various debt consolidation methods available, go through these steps:
- How much do you owe? Scrutinize your report and sum up all your debt. This will give you a clear picture of the amount you owe.
- What are your assets? Assets include your vehicle(s), home and other properties or valuables. What can you use to get money to pay off your debt?
- Check your credit score. Where do you fall? Will a drop impact your life moving forward?
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