Seven Things to do for a Successful Debt Consolidation
If spending money was your hobby or your “escape” or the way you relieved stress or kept up your image, it’s time to find something different to take its place. The only way you’re going to succeed at debt consolidation is to first realize your spending was a problem and then make a determined effort to stop excess spending. Remember, attitude is everything and therefore the right attitude is your key to success. Do this even if you choose something other than debt consolidation.
It’s one thing to have a low interest rate, but that low interest rate won’t do you much good if you’re paying it over 20 or 30 years! Also, make sure that low interest rate isn’t an “introductory” rate that will adjust upwards (increase) after some period of time. Use an amortization calculator to help determine the true costs of your debt consolidation funds. Paying $2 or $3 for every dollar borrowed is a high price to pay to get out of debt.
You’ve probably heard time and again that debt consolidation isn’t right for every situation and it’s true. If you’re unsure whether debt consolidation is your best option, talk your decision over with someone you trust. Since they want your business, debt consolidation counselors won’t always be as objective as a friend or family member.
Read each of your unsecured debt statements to determine the interest rate you’re paying. You might be surprised to learn that some are charging a lower rate than the rate on your debt consolidation loan. Consolidate only that debt for which you are paying an interest rate higher than the rate on your debt consolidation loan.
If you’re looking at debt consolidation as a way to start over, it’s imperative you implement good habits right from the start. Making your payments as agreed keeps your credit from being further damaged and protects any assets you’ve used as collateral.
If your debt consolidation loan doesn’t include a penalty for prepayment, then whenever you have extra money, use it to make an extra debt consolidation loan payment. Any amount above the minimum amount due usually is applied to the principle balance. If you get a bonus, commission, or tax refund, or if you just have some extra money because you’ve got your spending under control, you should do this. You’ll repay your debt consolidation loan faster, and pay less interest as a result!
Develop a habit of saving money for big purchase instead of using credit. You’ll have to wait longer to get what you want, but the good things in life really are worth waiting for!