Monday, 6 January 2014

Debt Consolidation Loan – Is This The Right Option For Dumping Your Fiscal Woes?

Posted at  08:06  |  in  Debt

With credit cards readily available, high interest debt on your credit cards is commonplace. As more and more people start incurring credit card debt, the debt relief options gain popularity. While the pitch of revised interest rates, lower monthly payments and extended repayment term make debt consolidation the most lucrative option for the debtors, it is also a fact to be considered that debt consolidation is not the right option for all debtors. Debt consolidation is nothing but combining your multiple debts into a single monthly payment to slash off the monthly installments and save money every month. Combination of your debts can be done through various forms but taking out unsecured personal consolidation loans is often the most popular option.

Taking out a debt consolidation loan – The personal finance illusion

Majority of the debtors are of the opinion that as they consolidate their debts through an unsecured personal loan, they’re half close to their objective of attaining a debt free life. But this is a myth. Taking out a debt consolidation loan doesn’t solve all your financial worries. It is nothing but a debt repayment tool through which you combing your payments into a single one and repay with ease. If you slide back to the same old bad financial habits while combining your debts through this loan, you can never get out of debt. All you can do is to delay the inevitable. Therefore, you need to adopt some serious financial habits that can help you move ahead on your road to fiscal freedom.

Making debt consolidation the best option for your financial state

If you’re wondering whether or not debt consolidation is the right option for your present financial state, here are some tips that can help you make this option the best according to your present financial state. Here are some tips to follow.

1. Set reminders of the due dates: The first step that you should ensure taking is to set reminders of the due dates so that you don’t forget to make the payments on the right date. Remember that failure to make timely payments towards your debt consolidation loan will always hurt your credit score.

2. Stop using your credit cards: Are you still using your credit cards while combining your debts through a debt consolidation loan? If answered yes, you’re simply wasting your time, money and energy behind consolidating your debts. Instead of using your cards, use cash while shopping so that you don’t keep incurring further debt.

3. Check if your payments are being reported: You should also check whether or not your payments are being reported to the credit bureaus. There are many lenders who don’t report your payments systematically and this is when your credit score doesn’t rise. You should keep a tab on your credit report.

Hence, when you’re about to take out a debt consolidation loan, you should keep in mind the above mentioned points. Try your best to make this the perfect option for your current financial needs and use it to live a debt free life.

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Jimmy Simond is founder of he share his immense knowledge of finance in this blog. You can follow him on Google+.


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