Too Much Debt
Christmas is coming, a period when many of us go a little crazy with the credit cards, getting gifts for family and friends, having parties and generally buying things that are a little more expensive than normal, to treat ourselves a little. When the New Year comes and we get the bill for it all, the party atmosphere can swiftly fizzle though, when we realise we have pushed ourselves into a nasty financial corner. Between a mortgage, car loan, personal loan and credit card repayments, we might not have enough cash to cover them all, and are in risk of becoming in default of one or more, which is a scary thought.
Consider Your Options
Doing something swift is probably not the smartest move, as this is a time to make long term decisions, which can have a serious impact on your future. Taking out a debt consolidation loan may help if it will reduce the overall monthly outgoings, though hard thought should be given to all options before going ahead. Identify exactly what is going out where, and consider your options on each of them on an individual basis first. It might be best to switch to a different home loan to reduce that monthly outgoing, or do a credit card balance transfer, which offers a lower rate of interest. However, it is important that a recognition is made that to be in this situation in the first place, you have been living beyond your means and cutbacks are necessary.
Consolidating all of your debts into a single loan can be beneficial for some people and may wipe a thousand dollars a month or more from your repayments. The danger for many is that the money saved gets spent, and the credit card debt can begin to rack up once more, leading to a worse situation. You should also consider what you are putting into the consolidation. Your car loan might be for two or three years, so rolling it into a loan which will continue long after the car is scrap would not be a wise move.
There are options for people regardless of their history and any good broker can show you how to obtain a debt consolidation loan in Australia with bad credit.
To really deal with your problems, consolidating all or part of your debt is only one aspect of the long-term solution to getting back in front. Finding savings of as little as $100 a week in your household budget would be a really brilliant idea. Stop using the credit card and use this money, plus the normal monthly payment, to bring that item down and clear it, which will happen surprisingly quickly, once you have made the decision. Once the card is clear, the money you were paying on it each month, plus the $100 will now very rapidly clear the personal or car loan. In just a few short years, the only debt you have remaining will be the mortgage, which can also be paid off much more swiftly given the additional monies you have freed up. Debt consolidation isn’t right for everybody, and for those who it is good for, will help you move forward, only if you use some of the monthly savings to reduce debt, rather than considering the saved money as cash for spending or buying. Tough at first, you will be surprised how easy it becomes, and it is realistically the only path to a debt free future.