Are you finding it hard to fall asleep at night? Do you stay awake late at night, stressing over your budget and trying to figure out how to pay off your multiple debts? If the answer is yes, then you have come to a place that can help you. You see, you are not alone in this, Nowadays, there are many people who struggle with debt. It is even safe to say that many American households have multiple debts to repay.
Why are so many people having trouble with debts?
The short answer is – life is very, very expensive. The truth is that nowadays, even hardworking people with good jobs and good monthly income are struggling to pay their regular monthly bills. Living in such an unstable economic environment, it is really hard to make long-term financial plans. Even if you put all your effort in structuring your budget in the best possible way, life could still often find a way to surprise you. Having unexpected emergency expenses is one of the most common reasons why people go into debt. An emergency expense can be anything from your car breaking down on your way to work, to a major health problem. So whether you cannot afford to pay your monthly electricity bill or you are confronted by an emergency financial problem, taking out a loan is often the only solution. However, once those loans start to pile up, it becomes very hard to pay them off. That is how most people end up carrying multiple debts. Other ways to get in debt include:
Taking out a student loan
While taking out a student loan cannot really be put into the category of ‘bad loans’ it is still a debt that you have to repay. People normally take out student loans because they want to invest in a better, brighter future. Paying for education is very expensive, so for most people, the only way to afford a college education is by taking out a student loan. However, many of them do not realize that they may end up repaying that loan for the rest of their lives.
The American dream has always been to have your own home. And so, many people take out loans to buy a house.
How can you pay off your multiple debts?
There are different ways of paying off multiple debts. However, there is definitely one method that is most used by people struggling with multiple debts and that method is debt consolidation. Below, we will explain what a debt consolidation is, and we will also look at some the best ways to consolidate debt.
What is debt consolidation?
Debt consolidation is a way for people to pay off their multiple debts in a quicker and easier manner. This is done by combining all their monthly debt payments into just a single payment that they pay at the end of each month. Having a single monthly payment instead of having to write multiple checks to multiple creditors has many benefits.
Debt consolidation benefits
It is already hard enough to manage your budget when you only have to take care of your regular monthly bills. Add multiple debt repayments, the situation can get quite complicated and exhausting. By combining all your debt bills into a single monthly payment, you will save yourself from a lot of unnecessary stress. You will save plenty of time calculating your budget, and you will make your financial life a bit easier overall.
- If you are using a debt consolidation loan as your method of consolidating your multiple debts, you will get new terms on your debt consolidation loan that are normally lower than the combination of all your current debts terms. That includes lower interest rate and fees.
- By consolidating your multiple debts into a single monthly bill, you will usually have a monthly payment that is going to be lower than what you are paying for your multiple debts each month. And having a lower monthly payment can free up some space in your monthly budget for other stuff that you need or have to take care of.
What are some of the best ways to consolidate debt?
There are three main methods for debt consolidation:
- A debt consolidation loan
- A debt settlement
- A debt management plan
None of these is an easy or a super quick fix. However, these methods are the most common methods for consolidating debt.
Debt consolidation loans
Debt consolidation loans are probably the most used method for debt consolidation, especially if your debts are unsecured. What a debt consolidation loan basically does is, it combines all your current debts, into a brand new, larger loan. The benefits of such loan can be really, really good. Your debt consolidation loan is going to have new loan terms, which are normally better than the terms that you have on your debts overall. That include lower interest rate and fees. However, if you do not have a good credit score, getting a debt consolidation loan with a lower interest rate is going to be really hard and it is highly unlikely that you would be able to find a loan lending company that is ready to offer you such terms for your debt consolidation loan.
Debt management plans
Debt management plans are generally recommended by financial experts as the best way for consolidating debt. With debt management plans, your best options would probably be to contact a non-profit debt consolidation organization. That agency can help you get a lower interest rate on your current debts and reduce your overall monthly payments.