How to Consolidate Your Debt

how to consolidate your debt

Debt weighs on our shoulders like a barbell at the gym that is too heavy for us to lift. It feels as though that no matter how hard you push, the weight does not move. Luckily, knowing how to consolidate your debt can make it easier to tackle your bills.

The process of debt consolidation makes the seemingly impossible, possible. We already have enough bills to keep track of, so the more we can reduce this overwhelm the better. This service won’t solve all your financial woes, but it will at least help…in a big way. Below are a few do’s and don’t’s on what to look out for, how to follow through, and determining whether or not it’s right for you.

How to Consolidate Your Debt

Find the Right Lender

Finding the right lender will undeniably take some time and research, but searching online is a great place to start. Any time you come across a company, make sure to check their reviews and score on the Better Business Bureau’s website. You’ll be able to gain an idea if they would be a good fit for you. But, here a few quick things to look out for from an appropriate lender:

  • Avoid lenders that pay their employees on a commission. You want to avoid companies that try to sign you up for services you may not need simply because they’ll receive a bigger paycheck.
  • Look at interest rates and companies with one application process. Don’t be afraid to shop around; after all, you do want to find the best option for you. Spend some time comparing companies and seeing how long they’ve been in business, seeing if their fees are reasonable and more. Also, lenders you find on the internet can provide you with a more streamlined process instead of waiting for paperwork to clear.
  • Stay away from companies promising a quick fix to your problems. Debt can take a while to heal, so any lender that claims they can significantly reduce your payments or get rid of your debt fast should trigger a red flag. Really, anything that says they have quick fix solutions is generally a bad idea.

Talk to Your Credit Card Company

Don’t be afraid to reach out to your credit card company to speak with them about your financial situation and your struggles. Many know they will have an easier time collecting money from you if they allow you to make smaller payments during your tough time. See if you can renegotiate some of your terms and fees until you are able to catch up. They key is to keep them in the loop as much as possible.

Ask Your Lender Several Questions

Part of learning how to consolidate your debt is to ask as many questions as possible. Consolidation can be especially beneficial for credit card debt specifically, but you should always get a second opinion. You want to make sure you know what the pros and cons are to your agreement, as Time suggests in this article, whether you will pay a small fee to reduce your overall interest and payments or if the low rates offered are only part of an introductory promotion. Additionally, you’ll want to make sure you ask about the privacy policy as well. The last thing you need to add on your plate (other than more debt) is to have your information leaked to outside companies.

Of course, prior to starting this entire process, you need to not only know your credit score to gain a full grasp of your situation but also recognizing the root of your problem. Know that consolidation is also not a solution but a temporary fix. Create habits that will discourage debt accumulation moving forward such as paying off credit card bills right away and building your savings. Don’t purchase unnecessary items, and realize where you might be wasting money.

Have you ever had to consolidate your debt? Share your experience with us in the comments below. 

A Personal Finance Checklist To Kick Off Your 30’s

A personal finance checklist can help you achieve financial goals.

A personal finance checklist can help you achieve future goals.

A personal finance checklist can be useful to ensure you are on well on your way to achieving financial success (or even simply evaluating where you stand).

Your 20’s are a great time to figure your life (and yourself) out. By the time you are 30, though, you should ideally have much of your life in order. Today’s millennials do tend to take longer to get married and start their lives, as recent reports show, but in order to set yourself up for your later years, you should analyze and improve your finances now.

I just celebrated my 29th birthday at the end of April, which encouraged me to reflect on my life experiences thus far and consider the future. The last decade was focused on enhancing and nurturing my career and my personal life along with developing myself as a full-blown adult. Basically, I spent the last 10 years getting my life in order.

As I prepare for a new decade, it’s time to take the next steps for my future. One of the first steps includes using my own personal financial checklist to accomplish over the next year in order to achieve more of my financial goals. With each milestone, my monetary ambitions change, and yours should too. I’ve already accomplished some of these topics and others still need improvement. As you begin to map out your own, this personal finance checklist will hopefully help you in more ways than one as well:

Budgeting 

  • If you have not already created a budget for yourself, you should do this first and foremost. Tracking your income and expenses is definitely not fun, but it does help to keep you in check and help you build wealth.

Reduce your debt 

  • By the time I was 27, I had paid off my car and two credit cards. My credit score not only went up significantly following these achievements, but I was able to use the money I was using toward this debt to increase my savings account. While I still have my student loan debt I am working on, my credit cards were my top priority to pay off as their interest rates tend to be higher than student loans. I’ve been able to pay more than the minimum amount each month over the last few years with less debt hanging over my shoulders though.

Save for retirement 

  • If you have not been lucky enough to have a 401(k) or similar retirement plan with your job, it’s time to open your own Roth IRA or another retirement savings account option. If you do have a 401(k) with your employer, start contributing more toward this fund. Ask your employer about a match program they may offer and do what you need to do in order to take advantage of this benefit. If you can swing it, you could invest in a separate plan as well as following one with work.
    • How much should you put toward retirement? A common recommendation is a minimum of 10% of your income. If that does not seem feasible at this time, especially with other savings plans you may be contributing to, such as an emergency fund, shoot for 2-5% and work your way up to the 10% goal.

Diversify your financial portfolio

  • As you reach your 30’s, this becomes important to include on your finance checklist. Mix up your investments through stocks, bonds and the like. Before going into such a venture blindly, be sure to do your research and even consult with a financial adviser or stock broker.

Plan for the future

  • No one ever wants to really think about dying or life emergencies, but the fact of the matter is, anything can happen to any of us at any time. As you begin to build financial stability, consider starting a family and reach more life milestones, you will want to contemplate the following:
    • Life insurance. Having a life insurance plan for you (and your spouse, regardless of whether or not he or she works) will be imperative in making any hurdles life throws your or your family’s way a little easier to deal with.
    • Naming beneficiaries on your accounts. Appointing your assets to various people in the event of your passing may not seem necessary at this point in your life, but you need to be prepared for anything. If you are not married and do not have a family of your own, you will want to consider leaving your financial accounts and any assets to your parents or siblings. Your beneficiaries will most likely change and need updated multiple times throughout your life, but get it started now so that it is not a worry later.
    • Estate planning. You do not need to be wealthy in order to start your estate planning. Get a power of attorney and a health care proxy to act on your behalf should you become debilitated and/or lose the ability to make your own decisions. Doing this will ensure you still have a full say in what happens particularly to you and your family.
    • Disability insurance. Regardless of age, you should be prepared for any event in life. If something happens that causes you to no longer be capable of working, disability insurance will provide you with a source of income.

Have a financial plan with your significant other

  • Married or not, live-in couples and relationships that openly discuss finances tend to have a higher success rate in surviving the partnership. Talk to your significant other about a financial plan and goals and compromise when needed.
    • Not married or living with a significant other? Create your own financial plan and be as specific with it as possible.

While a personal finance checklist may seem a bit daunting, it does not have to be all work and no play. It is still important to remember to splurge on yourself from time to time. As you become more financially responsible (and stable), you will find this much easier to do without placing much stress on your bank account.

Start a new decade off right with this personal finance checklist as a beginning point. If you are already in your 30’s and have yet to incorporate any of the above items, take some time to begin including these in your life goals and plan.

What would you add to the list?