Do you have a ton of bills you have to pay each month but wish that you have it lesser and under control? There is a good chance it has crossed your mind even once, to consolidate a bunch of debts and think that your money woes will be solved. Thing is, it wonâ€™t necessarily get you there as you thought it would.
Before you take any step further, there are several things you need to keep in mind: there are pros and cons on debt consolidation. It may seem the perfect solution to you now, to pay off all your debt to achieve that financial independence youâ€™ve been setting your eye on, but you need to always do your research first if this option will work for you.
The first major step you must take on gaining control of your personal finances is to decide on eliminating all personal debts. There is no magic solution or a secret formula in doing this. You must be willing to make a few sacrifices for now and be willing to cut expenses. Possibly a little less of eating out, fewer shopping trips or even lesser entertainment, to direct this cash flow towards paying down your debt.
After this is taken care of, you would need to watch out for the interest rates.These are extremely powerful as they can work against you and keep you in a financial constraint or it could work for you and make you financially independent. Have you ever thought of how much money youâ€™re paying on interest alone every month for all those payments? If you have a lot of debt like several loans or credit cards, you may be paying hundreds or even thousands of dollars only in finance charges alone. When you lump all your debt together, youâ€™re only going to pay one interest on one loan and more often than not, receive a lower rate, making you save a lot of money in the long run.
As you consolidate your debt, you are gathering multiple payments and putting them into one. This is a whole lot easier to stay organized, as you no longer have to track and and decide who you should pay first and how much you will send in for payments.
If youâ€™ve been struggling to pay down debt month after month, youâ€™d probably be interested in lowering your payments, whatever it takes. Since you will only have one payment and one lower interest rate, the monthly bill is definitely going to be a lot less.
Even if this sounds ideal, there are several drawbacks as well on debt consolidation. If you are not careful, there is a potential to acquire more debt since you will be freeing up money and youâ€™d have a little extra to spend now. If you want to play it smart, put that extra money towards debt or save it up. You could end up right where you started again, drowning in debt and the cycle starts all over again.
There is even a possibility that it could ruin your credit score so better be careful and read the fine print before agreeing to debt consolidation. If you are looking for a reliable, secure and trustworthy company to assist you in managing your debt, you can check out Trust Deed Scotland They are the first choice for thousands of people across Scotland for free, ethical and extremely qualified debt advice to cater to your needs and who understands Scottish debt deeply.