Debt Consolidation for Authors- how does it work?
If you are anything like me, at one point or another you have found yourself with a bunch of credit cards or loans, sheafs of bills and paperwork scattered in front of you.
Each one has a different payment date, a different payment amount, and a different % APR. Just keeping on top of the repayments feels like a full-time job. Click here for more info on debt and how it might affect you.
Pretty confusing, right?
As a writer, numbers aren’t my forte. Being self-employed, juggling different accounts and different payment dates and different amounts is less than ideal when my income fluctuates every month, and comes in at different times each month, too.
Are you in the same boat? Read on to find out about a solution to make your life a lot simpler.
Understanding How Debt Consolidation Works
Debt consolidation is a way for people with multiple debts to combine them into one lower-interest loan. This can help people with debt to reduce their number of monthly payments, and lower their total interest charges. Click here for more information.
The debt consolidation process starts by looking at all your debts and adding up the total amount you owe. Then, you take out a new, larger loan for the amount of all of your debts added together. You use this loan to pay off all your other loans.
This new loan should have a lower interest rate than some or all of your existing loans, which will save you money as you pay all the debt off.
Finally, you make regular payments on this new loan until it is paid off. This means you pay all your debts in one simple monthly payment to one loan provider, at one interest rate.
If nothing else, this simplifies your life greatly, with only one set of documentation and one payment date per month.
Debt Consolidation Can Reduce Your Borrowing Costs
As we have seen, debt consolidation is taking out a loan that is used to pay off all of your other loans. It sounds like a good idea, but there are things you should know before you take the plunge.
The first thing you should know about debt consolidation is that it will not make your debt disappear. It won’t reduce the amount of actual debt you have to pay, though hopefully it will reduce the amount of interest.
It will change the way your finances look on paper, and potentially change the interest rate on some of your borrowing.
Be sure to shop around for your new debt consolidation loan, and make sure you get the best deal for you. You can try a comparison website initially to see what sort of loans are available.
There are four things you should know about consolidating your loans:
1) There are no upfront costs and there may be a reduction in interest rates
2) You’ll be paying off more than one loan at once
3) Your monthly payment will go down
4) It could help you get out of debt faster
Consolidating your loans is a great way to take control of your finances. Because of the reduced interest rate on the one, new loan you take out to repay all of your other debts, it can reduce the amount of money you pay each month. Because of this, it can help you get out of debt faster.
It’s important to understand that consolidating your debt does not change the amount of debt you owe or the number of payments you have to make each year. What it does is to combine all your monthly payments into one, so it’s easier for you to make sure that each payment gets made on time.
Is debt consolidation right for me?
Debt consolidation is a solution that helps people who have multiple loans and credit cards, but it’s not right for everyone. If you have a high income, good credit score, a regular income, have all of your debt on low or zero interest plans, and you’re able to make payments on time, then debt consolidation may not be the best option for you.
However, if you are fed up with juggling a lot of payments, and you think you can get a better deal on the interest rate you are paying, then it is definitely worth looking into. Also, if you are interested in saving a little money on the interest payments, consider it as an option.
After all, paying 10% interest on a personal loan is a big saving from 29% on a credit card. Saving that interest payment alone could help you pay off your debts faster once they have been consolidated.