There are many pros and cons to think about when deciding whether or not to do a debt consolidation. First you should make sure it’s something you need to do. Just because you are struggling with paying your bills doesn’t mean you should consolidate your debt. Most people these days are struggling with something. Between the cost of living and the lack of stable economy, we are all struggling. If you owe more than $10,000 in credit cards or pay out more than you make in a week then you should probably consider it. Here are some of the negatives or “cons” of debt consolidation.
Once you consolidate your debt it may take longer to pay off. You will get all your debt rolled into one loan. This loan may take twice as long to pay off as it would if you didn’t consolidate.
There a chance you may not qualify for a loan. If you have too much debt you this could hurt your chances, also if you are approved the interest rate may be very high.
There’s a good chance that your debt will grow. Once you consolidate your credit cards into one payment it will be easy to continue to use them. In this case, you have the chance of doubling your debt.
You won’t be able to pay off smaller balances that have higher interest rates. Once everything is rolled into one payment you’re stuck with that interest rate.
Finally, mentally you will feel better, more secure. This is a false sense of security! It will be easy to fall back into the bad habits that got you to this point.
Here are some of the good “pros” of a debt consolidation.
You will only have to write one check a month. This way you can budget more effectively. After you do a debt consolidation, you will have to budget yourself so don’t fail father behind.
You won’t receive anymore collection phone calls or mailing. You will be able to answer the phone again without worrying who’s on the other end.
If your debt consolidation is used through a 2nd mortgage, you may have the benefit of using it towards your taxes at the end of the year.
You will have a smaller payment every month. Whereas leaving you with more money to pay your mortgage and other bills. Take advantage of the extra money and pay your utilities down or put towards mortgage.
Now it is up to you, we have looked at some of the pros and cons of debt consolidation. Now sit down and get all your bills out in front of you and make a decision! You can’t run from your debt, but you can consolidate it.