Carrying debt can be quite a traumatic experience! Having been deep in the trenches of debt I can tell you what an emotionally draining experience it can be, and how it can consume every part of you. Owing money to creditors at a high interest rate can create a dangerous snowball effect that is very difficult to overcome. With the plethora of credit lines available today you have too many options for taking out different types of debt. Consider that you have mortgages, pay day loans, home equity loans, credit cards, personal loans, and even peer-to-peer lending. You could find yourself with one or all of these different types of debts. This is precisely why I think there is a lot to be said for debt consolidation, not only for lowering your overall interest rate, but for the sake of simplicity and keeping track of your debt.
A company named Zopa has come up with a fun and interactive graphic that illustrates how to go about properly consolidating your debt. Basically, it starts with you writing down your various sources of debt and monthly principal and interest payments. Next, you simply to need total up your monthly earnings less your monthly expenses. This should leave you with a fairly simple budget outlook and the financial capacity you have left for tackling your debts. Your next step is the best part, debt consolidation! You need to research which type of loan is right for you, that the interest rate is lower than the combination of rates you are subject to today, and a term that you can manage. From there the infographic explains the importance of improving your credit, keeping up with your monthly payments, and avoid new debt at all costs! In my personal experience I find this is where most people go wrong. When people take 12 different monthly payments and consolidate into one manageable monthly payment they begin to have a false sense of financial security. This false sense of security often lulls them into taking out more debt and getting themselves back into the same ugly situation they just got out of.
Do some research and you will discover that you have many options for consolidating and eliminating your debt. Make sure to carefully review your options and pick the one that best fits your unique situation. From there make sure to maintain a healthy finance lifestyle!