As just about everyone knows from their own personal experience, debt is a lot easier to get into than to get out of.
Credit cards go from being a convenient way to handle large expenses to a supplement to your income you never quite manage to pay off, while that line of credit you took out years ago to cover a year of tuition doesn’t seem to get any smaller no matter how diligent you are about making payments.
If you’ve found yourself staring down the barrel of multiple unsecured debts that are compounding every month and have no idea how you’re going to maintain your minimal payments (let alone pay it off entirely), here are three reasons consolidation can help.
1. Consolidation Makes Payments More Manageable
The average North American has four separate credit cards, and carrying around so much unsecured debt is one of the reasons it is so difficult for Americans to end up having to juggle several minimal payments at different interest rates every month.
It can be hard to keep up with all of them, and this can lead to a snowball effect. Consolidating debt means there is only one monthly payment you need to make, at a single interest rate.
2. Consolidation is a Path Out of Debt
Consolidation provides immediate relief, but it also makes it possible to plan a realistic path toward a debt-free life.
Paying off one creditor at a time and each debt at a different interest rate can feel like being stuck on a hamster wheel, where it becomes impossible to imagine ever getting rid of your debt entirely. But with consolidation, your monthly payment gets spread across multiple creditors and your total debt is set at a single interest rate so in most cases, you end up paying less interest and making a dent in the total amount owing.
Because consolidation puts all of your unsecured liabilities into a single pot, it’s a lot easier to chip away at the capital over time, eventually giving you a chance to retire it completely.
If you are considering your debt consolidation options the first step you should take is to get in touch with a certified Credit Counsellor from a non-profit credit counselling agency who can provide personalized advice at no cost on how best to move forward.
3. Consolidation Can Help You Rebuild Your Credit
As any Credit Counsellor will tell you, getting out of debt completely isn’t always the end game. There are plenty of forms of good debt you may want to take on in the future once you’ve paid off all of your unsecured debt. These other forms of “good” debt include:
- A mortgage to buy property
- A student loan to go back to school
- Capital to purchase or invest in a business venture
Once you’ve gotten rid of your unsecured consumer debt, you can start rebuilding your credit rating so that when you have some savings to make a major investment in your future, you have the kind of credit rating that will empower you to get the financial support you need to realize your dreams, whether it’s a mortgage, student loan or line of credit set at a low-interest rate.
Juggling multiple payments every month is stressful, tiring, and anxiety-inducing, and it can mean putting off long-term planning that can help you achieve the life you want. If you truly want to be free from the concerns that come from carrying around unsecured debt, consolidation is the best way to get started.