https://loanappplus.com/blog/five-golden-rules-for-debt-consolidation/Five golden rules for debt consolidation

Five golden rules for debt consolidation

For debt consolidation to work effectively, you need to have a clear plan of action.

It is necessary to set goals and stick to them, this is the only way out of debt. Getting out of debt can be a long and difficult process, but there is always a way out. Here are five golden rules to keep in mind as you take your first steps towards financial freedom.

Make a realistic budget

Debt money, an emergency fund, and contributions to retirement savings are usually included in a successful budget, but this is not enough in consolidation. Make sure you also plan for infrequent expenses, as well as periods of the year when expenses increase, such as holidays. Keep your budget tight but balanced. Also, always leave room for fun, as limiting yourself too much can end up leading to unexpected expenses. You should always leave some space for buying things that you appreciate and love.

Stop using credit cards

If you want to achieve a long term goal, you will have to stop using your credit cards. You must take steps to avoid the temptation to not use credit money. Some methods may seem horrendous, but they have been proven effective, such as cutting your credit cards, locking them up, or freezing them in ice. The best way to stay committed is to write down why you want to get out of debt and how you will get there. Plan carefully how often you’ll make payments and set reminders to keep track of progress.

Compare Consolidation Products

Consolidation is best for debts such as credit cards as they are high interest rate debts. Compare various financial loan presentation organizations. Take a look and make an informed decision. Consolidation will provide you with immediate financial relief and consultation and legal fees are included in the debt restructuring plan, resulting in you not having to pay any additional/upfront fees to process your application. Legal fees are determined based on the type of debt you have and the monthly payment. You can cut your monthly payment by almost half when you consolidate.

How to improve your chances of getting a consolidation loan

Add up all of your possible sources of income plus the money in your savings account and list that amount on your application, not just your salary. Debt consolidation loans usually have lower interest rates than credit cards and you can borrow more money. Your credit score as well as the amount of debt can be affected. Only a few lenders offer this option. It is important to note that you must have a steady income to qualify for a debt consolidation loan. Having a very bad credit history can prevent you from getting tested. This can avoid the temptation to spend that money instead of using it to pay off debt, where a creditor who sends money directly to your creditors can remove the temptation.

Enlist Support for Your Goal

Many may think that debt is shameful, but the support of loved ones is a powerful motivator. Always remember that most people in the Philippines are going through the same or even worse financial situation, don’t beat yourself up too much. You can use online groups and debt support groups, or a close family member can help you reach your goal. Some online lenders have developed specific guidelines or apps to motivate borrowers.

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