Effective Tips on Successful Debt Consolidation
When you realize you are broke, you might start thinking of resorting to some drastic measures. Put your credit card into a freezer! Give up eating forever! Put your favorite collection of Lana Del Rey's vinyl records at an auction!
However, even the least experienced financial management professional will tell you that getting out of debts requires a more detailed and realistic plan. The most common advice would be debt consolidation: you put all your debts to one credit or loan card to be able to pay the lowest interest rate.
Financial experts say that this is the most effective tactic. However, it does not mean it works equally well for everyone.
Debt consolidation will be the best solutions for those who want to deal with the debts with high-interest rates, for example, credit cards. Speaking of numbers, households owning credit cards in 2016 had a balance of $16,758 on average, NerdWallet reports.
Experts are convinced that people whose income will not allow them consolidating the debts should be thinking of bankruptcy as the plan for the nearest future.
And while you might think that debt consolidation is not a solution for everyone, you should at least give it a chance. In this article, we have prepared a list of the most effective budgeting tips to guide you through the process of debt consolidation.
Draw up a realistic budget
A certified financial expert Lara Plumber says that to make consolidation successful, budgeters should, first of all, not add new debts. Until your finances are under full control, avoid car registration fees or holiday shopping tours.
However, be realistic. If you are on a financial "diet" for too long, you might one day find yourself on an unplanned spending spree. So allocate some money for buying something nice to you and your relatives every so often.
Don't use your cards
A golden rule of consolidation is to give up using your cards, at least until your debt is paid off.
Remember your first idea of freezing your card? Well, you'd better do it if you can't control yourself. In fact, experts have a special name for such tactics: commitment devices. You have to stay committed to your goal of paying off the debt. Some people even find it helpful to put down all the reasons of why they need their debts paid. Why don't you give this technique a try?
Abstinence from using your card will secure you from unplanned expenses. However, be sure to use the card from time to time to keep the account running.
As you can see, getting your debt managed is not that difficult if you follow the right rules. You might also want to ask for peer support - paying off debts is nothing to be ashamed of! Just try to stay motivated and you will achieve your goal.