If you’ve never been taught the strategies needed to correctly manage your finances, dealing with debt can be like trying to walk a tightrope with a blindfold on. But it doesn’t have to be such a confusing and terrifying experience. While it’s true that consolidating your debt can be a solid strategy for getting back on track, there are a few things you must check before you go down the consolidation path. We’ve laid out four options for you below that will help you navigate these hard times.
What are the repayment terms?
Multiple debts do indeed equate to multiple payments and varying interest charges, but if you consolidate the wrong way, you may find yourself worse off than if you’d dealt with things separately. Make sure you’ve looked into the interest rate and repayment terms of the consolidation loan you’re looking at. Take time out to ensure that there are no hidden fees or conditions that will leave you struggling. Your best bet is to look into low-interest money loans as the less you have to pay on top of your existing debt, the better.
Are there any viable alternatives?
It’s surprising how many people don’t know that most of the companies responsible for providing necessities (like gas, internet, and electricity) will happily put you on a payment plan if you’ve fallen on hard times financially. As long as you get in touch with the provider and explain your situation, agreements can be arranged for services like gas, water, electricity, and even phone contracts.
This could involve suspending your payments, creating a more manageable plan, giving you a cheaper deal, and many more options. The last thing they want to do is chase people for payments. Bringing in debt collectors means losing more money. If you’re still within the threatening letters and email stage, try calling up customer support and seeing what you can work out.
Can you eliminate any debts prior to consolidation?
Depending on your situation, it may be possible to eliminate some of your debts before taking out a consolidation loan. This isn’t always doable for everyone. It’s worth paying off smaller debts in one hit, as you’ll be able to negotiate a better interest rate on your consolidation loan.
Note: if this isn’t possible and you’re not looking to consolidate immediately, you should first work on reducing larger debts. Higher amounts garner more interest, so the quicker you can reduce these large debts, the better off you’ll be.
Do you qualify for any assistance schemes?
You may also be able to seek assistance from charities or government organizations. Look into what’s available in terms of grants or local programs, and don’t let your pride get in the way of getting things back on track. Even if all you can access is food stamps, that’s one expense taken care of. In turn, this will help you cut down what you need to borrow when it comes time to consolidate.
Consolidating your debts can be a great way to reduce the stress of managing multiple bills and juggling everything that comes with them, but it doesn’t necessarily need to be at the top of your list of coping strategies. Make sure you’re chipping away at what you owe in the way that works best for your situation, and look into how you can reduce your interest as quickly and easily as possible. Most of all, don’t forget that this isn’t a permanent situation – everything will work out in the end, so long as you maintain hope and keep working towards a solution.