A debt consolidation loan is intended to pay off your other debts so that you have a single monthly payment to make rather than many. It’s usually used in order to consolidate credit card debt. Under the right circumstances, it can be an effective way of making your financial situation more manageable. Whether or not it will work for you, however, depends on a two critical things:
- Your ability to pay: Depending on how much you owe, a consolidation loan could be a long-term commitment. You need to be sure you’ll be able to make the necessary payment for as long as it takes—sometimes several years.
- Your ability to change your spending habits: Debt consolidation isn’t a cure-all. Combining your payments into one won’t make much of a difference to your overall financial picture if you don’t have the skills to better manage your money—and to make sure you don’t run up additional debts in the future.
If you do decide to take out a debt consolidation loan, make sure you seek the help of a good credit counsellor at the same time. This is someone who can help you set up a budget, offer tips for cutting spending, help you to rebuild your credit rating, and—perhaps most important of all—help you establish a savings habit so that you won’t need to use credit cards for future purchases.
Debt consolidation can work, but only if you’re willing to put the work into changing the habits that brought you to it in the first place. For more information or to find out if debt consolidation is the best choice for you (or to find out what your other options might be), call us now for your free, no obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.