Many people seeking debt consolidation loan advice want to know where the best place to get a loan is, how to get the lowest interest rate, and how to lower their monthly payment. And that's understandable. Those are all important things when it comes to getting a new debt loan. The problem is however, that if you focus too much on those things, you may forget what the main purpose of a debt consolidation loan is.
The main purpose is not to lower your interest rates and monthly payments, or get your creditors off your back. No, the main reason for consolidating debt with a new loan is to get you out of debt as quickly as possible. Don't lose sight of this.
You cannot borrow your way out of debt. And when you get a new loan to pay off old loans, you are not really "paying-off" anything. You are merely switching creditors in order to get more favorable terms. A consolidation loan should be looked at as merely a tool, that, when used within a larger debt elimination plan can be useful in furthering your goal of getting out of debt.
Start from the bottom. The bottom of your pile of bills and receipts that is. You need to drag out all of your financial records and plop them on a desk or your kitchen table. And that means anything that has to do with money and your life.
Once you have everything, it is time to start preparing a budget. Yes, a budget.
This advice is more valuable than any debt consolidation loan advice that I could ever offer you, because preparing a budget forces you to get to the root of your debt problems. And this is where the real change in your life and your finances will come from.
The first thing you must do is write down all of your sources of income, and all of your expenses. Do this in detail. If you buy a coffee each day, have a line in your budget for "coffee expense". The more detailed the better. This exercise will likely take you more than an afternoon. In fact, it will likely take you a good month or so of tracking your expenses to really get a handle on where your money goes each month. Get in the habit of asking for a receipt when you purchase something. This will help you track your day to day spending.
The goal of your budget is to get you living within your means (ie. your income exceeds your spending), and to free up cash each month to attack your debts. Before you run out and get a debt consolidation loan, prove to yourself that you can stick to your budget. You'll be amazed at how much debt you can pay off just by creating and sticking to a budget. Once you have been on a budget for say six to nine months, then, and only then, would I recommend that you look into a getting a debt consolidation loan in order to speed up your debt elimination.
You've got your budget. You have proven to yourself that you can
stick to it. You are making real headway in paying off your debts. You
decide that you are ready for a debt consolidation loan to help further
your debt reduction efforts.
Whatever you do,