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When and how to consolidate your debts

Everybody misses something and eventually you will too. We’re talking about debt repayments, particularly if you are juggling a number of different loans and/or lines of credit.

Life is busier than ever and eventually something will slip through the cracks. Now, with these slip-ups there may be consequences. It could be as slight as a reminder text from your lender and a flush of embarrassment as you quickly transfer funds or it could be some sort of penalty to be paid that might be accompanied with an annotation on your credit file. Either way, the risk of everything from additional fees, a lesser standing with potential lenders and that knot in the stomach when you realised you’ve missed a payment, is significantly reduced if you consolidate your debts.

How did I get so many debts?

Let’s start by agreeing that accumulating debt is not a slight against your character. In today’s world, servicing some form of debt is about as normal as owning a car to drive around in, or having a job to go to or having somewhere to live. There really is no stigma at all to worry about. That’s the first thing.

Secondly, depending on your lifestyle, your stage in life and even your personal preferences, multiple debts can accumulate over an extended period of time until one day you realise that you are servicing a:

  • Car loan from 3 years ago with two to go. Remember? You decided that an upgrade from your first car that got you from home to college and back again, was not only a good idea but an absolute necessity
  • Quick cash loan from earlier this year when the airlines had a 48-hour interstate flight and accommodation ticket sale – just a couple more monthly payments to go on that one
  • Credit card debt that is ticking along at a high rate of interest – you used to use that one for daily incidentals, coffee, fuel, the odd dinner
  • Mobile phone account that can get a little confusing sometimes as you’ve bundled it up with a couple of other items… anyway…
  • Emergency loan – yeah, about that car from 3 years ago… When the warranty expired last week it developed a suspicious cooling system issue which you need to get sorted before your annual road

Yes, well that’s five different payments you are making on a monthly basis. Add those to the usual utility payments and life stuff, and you’d be hard pushed to keep a track of it all, month after month, year after year. So, what’s the answer?

One payment for many debts keeps things simple

One of the first things you would want to look at is the comparison between the various interest rates on those credit lines. Are there two or more there that are way higher than the others?

Question two would be around the remaining duration of the loans. Yes, the interest might be higher than you would want to pay but if there are only 2 payments left, perhaps focus on consolidating the loans that still have 12+ months on them at a higher interest rate – there’s a potential saving there.

Now think about the time throughout the payment cycle (let’s call it a monthly payment) when things are a little tighter or more chaotic than other times? Would it be easier if there was only one or two payments towards the end of month instead 5 scattered, seemingly randomly, through a 30-day period? Again, that’s a lot to try and keep in your head unless you’ve got direct debits attached to every debt but even then, the onus is upon you to ensure the funds are always available. And you’ve got to do that while dealing with everything from the day-to-day, to birthdays, events and well, life.

Happily, there is a better way.

Find out more [link to call now or send an enquiry] about how we can help simplify life with a loan that best suits your circumstances. Remember, we can connect you to the best options via a wide variety of lenders and loan products through our extensive network.

The choice is yours.

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