Carrying mountains of debt is like being followed by a persistently dark cloud of obligation. There are many reasons behind accumulated debt, including job loss, divorce, and overspending. However, you ended up with multiple debts to your name. You may be having trouble making all of your payments and staying on budget.
Nearly 50% of Canadians claim that they will be unable to pay their basic living expenses this year without extending their debt. This type of crisis leads to bankruptcy, family breakups, and severe poverty issues. If you don’t want to end up in financial trouble, you may want to consider consulting with a debt specialist.
Programs like Consumer Proposal in Alberta can help families to address their debt and consolidate their payments into a workable budget. Let’s take a closer look at a few of the impressive benefits of consolidating your debt.
Simplify Your Budget
A juggling act with multiple credit cards and loans can lead to missed payments. A single missed payment will damage your credit report for the rest of your life.
You can make one monthly payment instead of multiple ones by consolidating your debts. By doing this, you will be able to keep track of your debt repayment progress and your bills at a glance so that you do not miss a payment and risk losing the points on your credit report.
Consolidation of debt is primarily intended to save you money. A faster repayment schedule or a lower interest rate will save you money when considering debt consolidation options. A personal or home equity loan for debt consolidation can help you pay off your debt faster and save money on interest.
Low Monthly Payments
In order to pay off debt faster, consolidating it may be a good option. If you prefer, you can consolidate your debt over a longer period with lower monthly payments. You must remember that a higher interest rate will be if you take out a long-term loan. It may help you work within your monthly budget if you are having trouble making ends meet.
Boost Credit Score
On-time payment history determines your credit score, but it isn’t the only factor. A credit utilization ratio, which measures how much revolving credit you use compared to what you have available, is also heavily considered by credit reporting agencies.
You should keep your credit card interest rates low to prevent adverse effects on your credit. Consolidating your debt using a personal loan or balance-transfer card may open up new credit opportunities and help you pay down your debt. Lowering your credit utilization may improve your credit score.
Faster Pay Off
The feeling of throwing money at your debt without any progress can be overwhelming. However, with debt consolidation, you’ll be able to set a timeline for paying off your debt. This allows you to clear your debt, improve your credit score, and construct a workable budget.
If you are tired of living under the weight of massive personal debt, now is the right time to discuss your consolidation options with your financial advisor.