Battle of debt management

Nov 27, 2014 |

Do not make the mistake of thinking that the mere fact that you have applied and been approved for a debt consolidation loan, that you debt problems are over. Getting a consolidation loan is only the first step in what can be a very long and drawn out battle of debt management.

Will you pay less with a single loan?

There is no guarantee that a single loan will be cheaper than a combination of all your other debts. Before looking for a debt consolidation loan, you must have all the information about the cost of your current debts available. Before accepting a new loan, it is worthwhile to run a calculation of what your costs and repayments will be after consolidation and before. Remember that lower repayments does not mean lower costs. Sometimes all that happens is that the debt is spread over a longer period of time. If all you do then is maintain the minimum repayments over a longer term, your debt costs may be higher despite periodic repayments being lower.

Single loan not a possibility?

If you have a mixture of secured and unsecured debts then a single loan to absorb all debts may not even be possible. Sometimes what works best is a combination strategy. You may be better off to simply roll credit card debt into some cheap balance rollover cards and add other unsecured debts into your mortgage. Not having one loan only is not a problem, you must consider your overall debt position before and after consolidation.

Changing your debt mindset

Consolidating without changing your debt mindset is like putting a band-aid on a wound. It will be better for a little while but then the problem will return. If your debt problems were caused by a single event that was unforeseen and is not going to ever come back, then perhaps there is nothing that you need to do. Your may well already have the correct debt mindset to prevent current debt problems from returning. However if you have simply bought too much without taking repayment of debt into consideration, then future spending behavior needs to be adjusted. People who have difficulty controlling themselves around credit cards, should consider getting rid of these for good. You can easily do everything you need using a debit card instead. However when it comes to debit cards, they will prevent you from overspending as once you have spent all you have, then there is no money available until your next payday.

Payday loans

It can be very difficult for someone who has never had to live on a budget, to start. Of course there will always be temptations around.Payday loans offer short term access to cash for those who did not anticipate a bill and have ran out of money between pay periods.

We strongly encourage anyone who has gone to the trouble of consolidating their debts to put some effort into a family budget. If that is not done, there is a real danger that shortages will be supplemented with payday loans, which will counteract the debt consolidation savings.

Learning money management and learning to live within your means is something that can take some time to master.







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