What is debt consolidation and how can home finance software help you keep track of debt payments? Debt consolidation is when you get a loan to pay off all other debts (eg. a number of visa/credit cards, student loans, overdraft, etc). In doing this, you are hoping to avoid the higher interest rates, get a smaller total monthly payment and have just one payment to make each month.
Some things to watch for when considering debt consolidation and keep track of with home finance software
- the new interest rate on the consolidation loan must be lower than your current interest rates, hopefully significantly lower. If it is not, you will end up paying more in the long run and you are wasting your time.
- if you are going through an agency, compare the new interest rate against what you are already paying and check any fees or hidden costs. Make sure again that you won’t be paying more in the long run. Be careful to not get yourself stuck where you find you don’t have a choice but go with an agency and end up paying more in the long run.
- being self-aware is a major part of debt consolidation. Why are you doing it in the first place and why have you needed to? Are you ready for a chance to not end up in the same state again (have more payments than you have enough money for)? Plan ahead for any expenses (groceries, dinner’s out, gifts, etc.) to avoid running into the debt pile and related stress again.
Remember, a consolidation loan will free up some extra money every month… Don’t spend that extra money! Use it to pay down your consolidation loan and get yourself out of the situation you are currently in. Being aware of your debt level has brought you to considering debt consolidation. This is one of the first steps to being on the right path to being free from debt.
Your next step is budgeting properly. Find a great and simple budgeting tool (like CalendarBudget) and use it every day until you are comfortable that you are on track. CalendarBudget even offers a free online money management tool video course. Keep track of your income, expenses, and debt consolidation goals with the CalendarBudget home finance software.