Recent studies have shown that the average debt of an Australian household has risen over the past 25 years. The story is similar in other countries throughout the world. If you are stuck just paying the minimum payments on your credit card or bank loans, it may well feel that you will be in debt for the rest of your life. But, one simple and smart option that many people do not consider in situations like this is debt consolidation.
Basically, this involves paying off all of the individual debts that you have and turning your debt into a single lump sum that you need to pay off. It gets rid of interest and late payment fees and (a factor that can be just as important), removes the stress of having to keep track of all those bills and payment dates from multiple sources of credit.
There are plenty of companies offering debt consolidation to help people get out of debt. Some of them are elite financial planning providers and others are charitable enterprises. There are a real range of companies out there offering to consolidate debt, so, no matter what amount or type of debt you have, you will surely be able to find the right company for you.
Many of the principles of debt consolidation are based on classical economics, and, as we know, such classical ideals last a lifetime and can really help you out when you are in a sticky spot as long as you use them well.
What Will the Impact Be?
Let us look first at the short term impact and then at the long term impact of consolidating your debts. The impact in the short term will often be that you have more cash spare. For example, were you spending $200 on paying off your credit cards each month? Well, with a good debt consolidation program, your monthly payment amounts will have become one manageable sum and you could have an extra hundred dollars or more spare to spend on groceries and other household essentials and luxuries that you may have been going without.
In the long term, of course, the impact of debt consolidation is much more significant: you will find yourself entirely free of debt! How long it takes to free yourself completely of debt will depend on the amount of debt that you have accrued and your ability to pay. But just imagine – all the money you earn will henceforth stay in your bank account, to be spent on all the things you need! Being debt free means that you do not need to face any more of those situations when you receive your salary one day and then have to give all or most of it to your credit card company the next.
Debt has become a way of life for many people living in developed countries in the present day. And yet, for most, it is not the lifestyle that they hold up as their ideal. Debt consolidation has never been more relevant to the modern family!