Consolidation Debt


Having too many bills to pay at a certain time is too tasking. It is also confusing and nerve-wrecking especially if you are too busy with other stuff like earning money to pay for these bills. Additional fact is that it is also tiring especially if you have to pay through different channels just to meet the deadline.If this is the case then it is time to consolidate your debts. Debt consolidation is when previous loans are combined to avail for a new loan which has lower interest rate and with longer span of time for payment.Debt consolidation is one of the solutions to be debt-free. It is said to be one of the easiest and the best way to earn freedom from debt.Here are some of the advantages and disadvantages of consolidation debt. As said earlier, consolidation debts have lower interest rates. If previous interests for your bills range from 10 to 15%, with the consolidation debt it can only range from 5-10%. The interest is based on the company where you plan to consolidate your debt. It is also dependent on the span of time for the payment.The interest rate will also rely on what type of consolidation debt you will apply for. Types of consolidation debt can either be secured or non-secured. Secured loans are those which require collateral for the loan. It has a lower interest. Secured loan also has a higher loan amount because of the collateral.Non-secure type of loan is where there is no need for collateral for the requested loan. The amount of loan is lower compared with that of the secured loans. It also has higher interest rate and shorter span for payment.Another advantage for a consolidation debt is paying one loan in place of the numerous loans. It is easier to manage because you don’t have to go to different places for the payment. In addition, you will only have to worry for one due date.And lastly, since you have already paid for your other loans, consolidation of debt with give you a chance to start all over again. You will only have to think of one loan and start from that.As for the disadvantages, consolidation debt has a definite span of time for payment. Since it is pre-computed, you have to pay accordingly.Another disadvantage is the fact that it is difficult to find for a company which can give an interest rate which is lower than usual.Lately, there have been some companies that refute the claims of consolidation debt regarding its advantages. Some say that consolidation debt does not totally cure the cause instead it just works on the symptoms. Even if you have already worked on the leading cause it doesn’t work all way throughout the budget.The symptom in this case is the loan and the cause is overspending and under saving. To be fully debt-free, one should work on this cause. A person should have a game plan regarding his or her spending. In case of emergency, the person if s/he hasn’t saved yet has still the tendency to get from the loan or use the credit card again.In terms of payment, it will take longer time if you just pay the minimum amount. Instead it should be doubled or even tripled if you have an extra amount of money.To help further in solving your debt, here are some actions which you might want to consider from time to time.Be cautious in borrowing money. You should not shop more than you can earn. Once the bill goes up and compiles, you might not be able to pay it anymore.If you already have a financial problem, act on it. Ask advice and search for the best solution that you can work out. Talk with the creditor and inform them of your situation.Prioritize the bills with highest interest and save whatever you can save to meet the demands of payment.Make the best of your income. Earn as much as you can and try to limit expenses as much as possible. Make sure that every adult in the house can help with the expenses.Consolidation debt is not the only chance to pay a debt. There are others which you can choose from. There is one best solution that suits you and your needs. Make the best of it to start a debt-free life.