DEBT CONSOLIDATION CAN DE-STRESS YOUR LIFE...
...if done properly. Done incorrectly it can result in more stress.
25/07/24
Debt consolidation can be a helpful strategy for managing debt, but whether it's right for you depends on your individual financial situation and goals. Here are some factors to consider:
- Multiple Debts: If you have multiple debts (credit cards, personal loans, ATO Debt etc) with varying interest rates and payments, consolidating them into a single loan can greatly simplify your finances.
- Interest Rates: Consolidation can potentially lower your overall interest rate. Some credit card debt can be at very high rates and replacing with mortgage debt or a personal loan, the rate can sometimes be reduced.
- Monthly Payments: It can reduce your monthly payments by extending the repayment period, although this might mean paying more in interest over the long term.
- Credit Score: Consolidation might initially lower your credit score slightly due to the credit inquiry and opening of a new account. However, over time, it could improve your score if you make payments consistently and reduce your overall debt burden.
- Financial Discipline: Consolidation works best when paired with a commitment to better financial habits. If you consolidate debt but continue overspending, you could end up in a worse financial situation.
- Alternatives: Evaluate other options such as budgeting, negotiating with creditors for lower interest rates, or seeking advice from a credit counsellor before deciding on consolidation. When you are ready to explore options, contact a Broker such as us, to explore options for you.
Ultimately, whether debt consolidation is right for you depends on whether it helps you achieve your financial goals, reduces your overall costs, and fits your ability to manage debt responsibly. It's advisable to compare offers from different lenders, understand the terms and fees involved, and consider seeking advice from a financial advisor or broker if needed.
Tony Moore
Director
Stellar Mortgage Advisors
m: 0493 990 767
w: www.stellarmortgageadvisors.com
e: tony@stellarmortgageadvisors.com
