| Debt Consolidation can offer much needed debt relief, | | | | cost of that loan will be considerably less than if you |
| however, if not structured correctly it can end up | | | | continue to make minimum payments on the debt you |
| costing you money and adding to your financial woes. | | | | already have. |
| There are many ways to allocate the funds you | | | | - Assess the costs above If the cost is fairly close or |
| receive under the terms of a personal loan. One of the | | | | more, then don't take out the personal loan. It will do |
| most popular uses for such loans is to eliminate debt. | | | | more damage to your current situation than good. Find |
| A personal loan offers a great alternative for | | | | out what the monthly payment will be as well. Imagine |
| individuals who are struggling to make monthly | | | | your shock if it ends up being more than what you are |
| payments on too many accounts. The idea is to pay | | | | currently paying out. |
| off such debt with a personal loan, then only have one | | | | Based on your findings above you will be able to take |
| monthly payment to make at a lower effective | | | | a realistic look at the reason why you have debt that |
| interest rate than the individual debts. | | | | you are having a hard time meeting the monthly |
| Some of the benefits of consolidating your debt with a | | | | payments for. It may be due to a change in |
| personal loan are: | | | | circumstances that you had no control over. However, |
| - Save Money - The one monthly payment is often | | | | if the reason is that you have poor spending habits |
| much less than you were paying before on all your | | | | then you need to address this issue before taking out |
| outstanding debts. | | | | a personal loan. Nothing is more upsetting than getting |
| - Improve Your Credit Score - Having only one loan | | | | a personal loan to cover your debt, then realize six |
| payment can also improve your credit score. This is | | | | months down the road that you have ran up a large |
| especially true if the other debt was mainly credit card | | | | amount of debt again. The situation with be much |
| debt with the balance being very close to the credit | | | | more grim now because in addition to paying off that |
| limit. | | | | debt you also have a personal loan payment to cover |
| So to get the benefit of the above this is how to go | | | | each month. |
| about consolidating your debts | | | | Enrolling in a debt management course or budgeting |
| - The first step is to make a list of all of your | | | | class can help you identify areas where you are not |
| outstanding debt. Make columns for information | | | | using your income wisely. There are also many |
| including the creditor, the balance due, and the interest | | | | excellent online resources to assist you. A good |
| rate. In the last column calculate the total amount you | | | | exercise is to have every family member write down |
| will pay on that debt making your current payments. | | | | all the money they spend over a week's time. You will |
| There are great calculators to get this information | | | | be amazed to see the pattern of things that are |
| online. These calculators are free and easy to use. To | | | | draining your wallet during this exercise, including that |
| do this, simply type in the balance, interest rate, and | | | | daily cup of coffee and eating on the run. This is a |
| monthly payment. In many cases you will be shocked | | | | great way to get all family members involved in the |
| to see how much that debt is going to end up costing | | | | budgeting process as well as involved in finding better |
| you. | | | | ways to manage money. |
| - Once you have completed that task, add up the | | | | In conclusion, whilst personal loans can be a great way |
| totals in each column. You will need to know the | | | | to eliminate other types of debt if applied correctly |
| balance due to pay off the debt as this is the amount | | | | however, you really need to ensure that a personal |
| you will need your personal loan to be for. You also | | | | loan will in fact lower your effective interest rate and |
| want to remember that overall cost total. It is very | | | | contribute to solving your debt problem rather than add |
| important that before you agree to the terms of a | | | | to it. |
| personal loan that you have made sure the overall | | | | |