Top 5 Debt Consolidation Benefits & 1 Risk To Watch Out For

Debt loads us down and puts a drain on our wallet, affecting our entire life as we struggle to catch up on payments and stay one step ahead of debt collectors. We have enough stress in our everyday lives and constantly being reminded of how far behind we are only increases anxiety – making it impossible to see the light at the end of the debt tunnel. Need some relief?

Debt consolidation loans should be considered if you have HUGE amounts of debt and don’t know how you’re going to pay it off. You can also benefit from consolidation if you cant ever seem to remember to pay your bills on time. Consolidation sounds complicated but it’s actually quite simple. All your doing is working with a professional who pays off your current debt and then issues one single loan to you.

Not only is debt consolidation easy, the benefits far outweigh the risks:

1. One Single Monthly Payment

When you are in heavy debt and behind on payments, it can be complicated to keep track of your payment schedule. Collectors are calling and mailing you on a daily basis which only adds to the confusion. They send multiple notices reminding you of due dates that you’re well aware of. If your not paying close attention it’s easy to send two payments for one bill. This leaves you short on funds for your other bills, or even worse, food money at the end of the month. Debt consolidation will lump all of your debts into one monthly payment. As long as you pay the new loan on time, you only receive one monthly bill.

2. Reduce Your Debt Related Life Stress

Debt causes a lot of stress in our life. Did you know people with high amounts of debt are more common to miss work or other life obligations due to debt related stress? Our family and friends only add to our stress as they try to be helpful: “Honey,  Did you remember to pay the _____ bill yet?”. It’s a well intended question, but under debt related stress, the reminder only escalates our stress level and causes us to say things we don’t actually mean. Debt consolidation will relieve this stress. How hard is it to get one bill paid each month? You can even setup auto-payments so you can reply back with “Yes babe, got it covered. :)”.

3. Save Money By Lowering Your Interest & Eliminating Late Fees

The credit card and other lending agencies are not stupid, they’ve seen it all before. When you’re in debt and applying for new credit, they only offer increasingly high interest rates. These rates only make it harder to make the minimum monthly payments. Paying the minimum means your not even paying down the principal. How are you going to get out of debt this way?

What’s even worse is the late fees they charge whenever you miss a payment due date. Does it really increase their cost $45 because your payment is late? No way, it is straight profit for the bank. Consolidating your debt can lower your interest rate and reduce your chance of late fees. With one lower monthly payment, are you really going to be late?

4. Stop Annoying Calls From Collection Agencies

You may have already informed collection agencies to not use auto-calling programs, but this is no longer effective to reduce the amount of times they call. With outsourcing taking off they hire people overseas for pennies on the dollar to call and remind us of our debt daily. Sure we may not answer the phone, but the caller-id reminder increases our level of debt related stress to the point we don’t even like our phone any more. With one consolidated payment, they stop calling automatically since your debt consolidator pays them back for you.

5. Improve Your Credit Report & FICO Credit Score

Debt consolidation is sounding better and better doesn’t it? Good news, I saved the best for last…. You will start seeing improvements to your credit report and FICO credit score immediately. Think about it, your credit report will be updated to show YOU PAID OFF ALL YOUR DEBTS. Not only that, your newly opened line of credit starts to build MORE POSITIVE PAYMENT HISTORY, only boosting your credit score higher and higher.

It sounds too good to be true doesn’t it?

As long as you work with someone who has experience consolidating debt, you will experience all of the benefits above, but let me warn you….

ONE RISK YOU MUST WATCH OUT FOR:

Only work with debt consolidation experts who disclose the TOTAL COST of consolidating your debt before signing on the dotted line. Debt consolidation professionals will always let you know exactly how much your saving, and what percentage of those savings they will receive as payment. Just as credit card companies charge interest, you can’t expect a free loan to get you out of trouble. Watch out for consolidation scams that have hidden fees and HUGE PENALTIES if you breach your contract in anyway.

Now spend some time analyzing your situation to see if debt consolidation will help you get and stay out of debt. Stay posted to my blog for debt consolidation tips and recommendations that will help you choose a professional who will help you get out of debt.