Is Debt Consolidation The Key To Financial Responsibility?

According to survey results, 59% of Americans live paycheck to paycheck. 

Other stats show that this number might be even higher, as much as 74%. What’s more, being stuck in a cycle of hand to mouth isn’t limited to lower-income brackets.

Data from Nielsen shows that 25% of families making $150,000+ a year are completely dependant on their next paycheck

These stats show that being financially comfortable isn’t necessarily about the income that you earn, as much as it’s about financial responsibility. 

Of course, life can take on its own momentum, and before we know it. we’re struggling to keep up with negative card balances and escalating debt. With this can come the sinking feeling that you won’t be able to get out from under your debts, or ever achieve financial responsibility. 

However, if you’re in this situation, we have some good news for you. Even if you’re battling large amounts of debt, it‘s possible to become financially responsible. 

One of the ways you can achieve this is through debt consolidation. If you’re determined to squash your debt and get your finances back on track, read on to learn one of the fastest ways you can do this. 

The Basics of Financial Responsibility

If you feel like you’re drowning in a debt cycle, figuring out how to be financially responsible can be daunting. 

Learning how to be responsible with your money is something that will take some attention, but it isn’t all that hard. 

Let’s take a quick look at some of the basics of financial responsibility, and then at how debt consolidation can help you achieve these. 

Living Within Your Means

You’ve probably heard it before: Living within your means is the key to financial health. Debt is, essentially, a result of not living within your means. 

Of course, sometimes you don’t have a choice (such as in a medical emergency). In other cases, taking out debt can be a smart financial move, such as applying for a mortgage to buy a home. 

In contrast, consumer debt is generally not a smart move. 

Neither is spending all of what you earn. In many cases, there are areas where one can cut down to reduce expenditure, such as the following:

  • Non-essential purchases
  • Travel
  • Subscriptions
  • Eating out

To live within your means, it’s essential that you reduce excess spending and avoid consumer debt where you can. 

Budgeting

To keep expenses below your income, and have enough money left to save, it’s essential to do some form of budgeting. 

Saving 

Saving is another cornerstone of financial responsibility. 

If you always spend everything you make, as soon as disaster strikes you may find yourself needing to take out credit, which just incurs more expenses in the form of interest and fees. 

Reducing ‘Bad’ Credit 

The other crucial step to becoming financially responsible is to reduce and ultimately pay off any ‘bad’ credit. Bad credit includes consumer debt and credit card debt. 

If you’re already fighting high debt payments each month, this might not sound like something that’s achievable. 

However, by leveraging debt consolidation, you may find that you can beat your debt, and get a head start to achieving financial responsibility. 

The Role of Debt Consolidation in Financial Responsibility

If you’re struggling with your debt payments, something needs to shift for you to pay off your liabilities and get on track to achieving financial responsibility. 

The key to this could be debt consolidation.

Debt consolidation works to combine all your debt into one place, resulting in one monthly payment and one rate of interest. 

In many cases, you may be able to secure a lower rate of interest than those on your individual debts. What’s more, having one monthly payment can be a lot easier to keep track of and budget for. 

Types of Debt Consolidation

Debt consolidation can be done in a couple of different ways. 

Personal Loans

One way you can consolidate your debt is to apply for a personal loan with an interest rate that’s lower than what you’re currently paying across your debts. 

This loan can be used to pay off the debts in one go. After this, you’re left with one monthly amount to pay off on the loan, and often a lower interest rate. 

Take note that to get a good rate of interest on a personal loan you’ll usually need to have a high credit score, something which might not be possible if you are defaulting on debt payments and maxing out any lines of credit. 

Balance Transfer Cards

Another way you can consolidate your debt is by applying for a balance transfer card. These solutions allow you to transfer your debt to the card, where you can pay it off with one monthly payment. 

Some balance transfer cards also offer 0% interest rates for a specific period. This is usually between 6-24 months. During this time, you have the opportunity to pay off your consolidated debt interest-free. 

Like with personal loans, to qualify for low or zero rate offers, your credit score will generally need to be in good or excellent standing. 

Debt Consolidation Companies

If your credit score has taken a beating thanks to your debt levels, you may want to look into working with a debt consolidation company. 

These organizations specialize in debt consolidation and will professionally negotiate with your creditors to secure better interest rates for you. They’ll also create a customized debt payment plan to ensure that you’re able to meet the monthly consolidated payments. 

When working with a debt consolidation company, you’ll pay them one lump amount each month, and they’ll then distribute this to your creditors. 

Debt consolidation companies generally offer reasonable interest rates, usually between 1% and 17%. They’re also forgiving of poor credit scores.

The Benefits of Debt Consolidation

Debt consolidation has the power to simplify your debt, secure lower rates of interest, and modify the terms of your debt so that you’re better able to meet them. 

What’s more, consolidating your debt will also rid you of any pesky collections agents, and build up your credit score over time. 

Assume Financial Responsibility and Find a Smart Consolidation Solution Today

Are you ready to assume financial responsibility and take advantage of the benefits of debt consolidation?

If so, the first thing you’ll need to do is start researching consolidation solutions. This is where we can help.

With our search tool, you can find tailored matches for your needs from our list of handpicked and vetter solution providers. Simply enter your details, and you’ll be instantly matched with some of the smartest choices. 

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