To some, consolidating your debt is a confronting prospect, but if done properly can be a great way to organising your cash flow, and getting on track to becoming debt free. Here are some of the reasons people are hesitant to consolidate their debt, and why they need not be.
They want to keep their mortgage separate.
This is a mental hurdle faced my many, but consolidating your debt into your mortgage can save you thousands in interest repayments alone! If you keep your mortgage at the same term, this method can help to clear your current debt and keep it more manageable. If you would still like to monitor your debt separately, there are loans available that will keep these split, so you can always monitor where you are with each. If you are unsure of your loan options, you may want to consider getting some professional debt help.
They don’t want to pay a large interest rate forever
The most important thing to realise when paying off debt is that if you can, you need to pay more than “bare minimum” repayments. Debt consolidation is a way to manage your debt, not eliminate it. You need to look at the situation realistically, and although the extra repayments may not seem to make a difference to your existing mortgage, you will eventually minimise your repayments, and get yourself into a more easily manageable financial situation. The more that is paid off weekly, the closer you will get to breaking even, or even becoming debt free.
They don’t want to change their lifestyle.
Unfortunately, when you are taking steps towards loan consolidation, you have to change your spending patterns accordingly. Budgeting is a necessity when it comes to paying off a loan, and people need to take steps to change their lifestyle so that they are saving rather than spending. This could mean getting rid of credit cards and sitting down to re-do your budget and figure out something that is both manageable, and more affordable.
It is recommended that you seek advice from a financial advisor to work out the best way of managing your debt. lifeafterdebt.com.au and their experienced consultants offer a number of different debt solutions, including debt consolidation to help your become debt free today. Contact us now on 1300 237 669 or to book a free consultation through our website.