Debt Dilemma – The 5 Benefits of Consolidating Your Debt

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Mounting credit card bills and other loans can be a huge obstacle to financial freedom hat often seems impossible to overcome. More importantly, these obligations prevent you from having the freedom to plan for your financial future. It is difficult to see a positive future with a pile of unopened, unpaid bills sitting in front of you each month and with calls from collection agencies demanding their money.

If you are looking to secure a positive financial future for you and your family, a proactive solution might be to seek the help of a debt management program that can help you find an appropriate debt consolidation loan. Debt consolidation loan providers like Latitude Finance can streamline your payments into one bill at the end of the month and make your debt much easier to manage.

Keep reading to learn more about just some of the benefits of consolidating your debt and how it can lead to a brighter financial future.

 

#1 Cost-Effective

One of the primary reasons you should seek out a debt consolidation loan is that they, ultimately, they save more money each month and over the life of the loan. Typically, those with multiple credit accounts pay out varying amounts every month. The payments on these accounts are compounded by the interest payments that accompany them.

Someone with four, five or six credit accounts can end up paying a lot of money in interest every month. A debt consolidation program, in essence, reduces the monthly payment, and in doing so, reduces the amount of interest you pay out monthly. Over time, you will pay less than you would if you tried to pay off each account individually.

 

#2 Credit History

Another great reason to seek out a debt consolidation loan is that they can repair the damage to your credit. Typically, most credit reporting agencies will lower your credit rating score when your credit report has too many accounts on it.

Furthermore, if your debt-to-income ratio reflects that your income is insufficient to support your bills, this will also lower the score. Add in late payments and delinquent accounts, and you can easily find your credit report in a very negative place.

Consolidation loans work because they reduce the number of accounts that appear as being current on your report. Also, consolidating your debts reduces the amount of money paid out monthly, so when calculating your FICO score, less money is paid out monthly improving both your debt-to-income ratio and your credit report. Finally, with a debt consolidation loan, you can actually afford to comfortably make your payments, which will allow you to reestablish good credit over time.

 

#3 Budget

A consolidation loan can work wonders for a person with multiple debts because on a monthly basis it will reduce the number of bills you have to juggle.

With one bill, you will find it much easier to budget your finances each month and can enjoy a little more financial freedom.

Moreover, with the extra cash that you save by consolidating your debts, you can use that to pay extra money towards your consolidation loan, pay off other bills, or simply begin saving for future plans.

 

#4 Experience

As a part of any debt management program, debt consolidation programs can teach you the basics of how finance and credit can work for you.

Some of the best programs offer assistance in the form of education on how to properly budget your income and expenditures, so the experience is not just about taking out a loan.

Instead, you come away from the experience with a better understanding of how credit can both help and hamper your financial position.

 

#5 Rebuilding Your Finances

The burdens of credit card and other debt can really be debilitating, often forcing people to make unwise choices that push them further into financial distress.

Ballooning payments and increasing fees are the ingredients of financial misery for many Australians but it doesn’t have to be that way. With a consolidating loan, you can re-establish good credit, improve your financial prospects and look forward to a stress-free future.

What other benefits to do you like about debt consolidation?

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