Financial misery is a place where no one wants to live. Everything there is lacking, and when resources become available, they are consumed quickly with nothing left to show for all the effort that had been expended in earning the income. Debt dystopia, unfortunately, is a reality for many Australians who have been engulfed by a consumer culture that promotes materialism, and in some cases, excess.
Reining in an out-of-control budget is not difficult, however, because of the number of financial tools available to consumers. Consumers have the benefit of using credit and equity to reduce their monthly payments. You can also consolidate your debts with a loan provider like Latitude. Escaping financial dystopia is possible, even when it may look like there is no light at the end of the tunnel.
Let’s take a look at some steps you can take to revive your finances through debt consolidation and eliminate the stress of debt.
Re-Establish Credit
Consolidating your debts has a number of benefits, but one of the least often discussed is how it can be a tool for re-establishing your credit. When in the middle of a financial disaster, paying bills on time becomes increasingly difficult. As bills in the mail pile up, making a late payment, or worse, completely ignoring one, can severely damage your credit rating. For each late payment or missed payments, points are deducted from your credit report. Furthermore, charge offs and delinquencies make it nearly impossible to get credit anywhere else without paying unreasonable interest rates.
Through debt consolidation, borrowers have the chance to take control of their monthly bills, but more importantly, it allows them to pay their bills on time. In essence, debt consolidation allows consumers to re-establish and repair a damaged credit report. When looking at consolidation loans, consider this option as way to improve your credit rating.
Lower Monthly Bills
Another benefit of the consolidation loan is that it allows borrowers to reduce their overall monthly expenses. Typically, a person paying off multiple debts will also be paying interest on each account. In one month, your bills can be excessively high just because of the amount of interest paid out.
With a consolidation loan, all of your bills are combined, and you are only responsible for one payment. Moreover, you are only paying on the interest rate for one principal balance. For the most part, your payment and interest are reduced making it possible to actually have a little extra at the end of the month.
Re-Establish Savings Or Pay Other Bills
One of the best things you can do with that little extra at the end of the month is to save it. Even if you save as little as five dollars a month, the whole point is to get in the habit of putting something aside for emergencies or for projects down the road. Right now, your life might be in the middle of a financial maelstrom, but in the future, you might have the chance to purchase a home or other property. That small savings account can grow into a small fortune that can go toward funding your dream.
Alternatively, that extra can also go towards paying down balances on other bills. If you own a home, pay extra on the principal or escrow. You can also set up a fast-track payment schedule for totally reducing your debts by applying the extras to other loan balances, which, in the end, will allow you to have more disposable income to put towards further savings.
Moving Toward Your Financial Utopia
With the miseries of out-of-control debt far in the distance, you can walk in true financial freedom, thanks in part to debt consolidation. By combining your loans, you essentially give yourself a little more flexibility in how you’ll manage your bills every month. Ultimately, debt consolidation can be the path to re-establishing severely damaged credit as well.
