Consolidating your Debts
We all have many different types of debt that we’re forced to juggle, from our mortgage to our credit cards to car loans. With numerous debts, all worth different amounts and with various interest rates, managing debt can often be difficult, creating an extra layer of stress.
A popular solution for this predicament is to consolidating your debts. Debt consolidation is the process of combining all of these loans into a single debt with a lower interest rate. By rolling all of your debts, particularly those with high interest rates, into one, you can reduce your monthly repayment and simplify your finances.
The advantages of debt consolidation
Consolidating debt can be a fantastic option for anyone struggling to keep track of all of their different debts. One of the difficulties of having numerous different debts to pay down is that it can be tough to figure out which debt takes precedence. While some debts are lower in value, their higher interest rates make them a bigger priority. At the same time, you need to pay off just enough that you have sufficient funds left over to deal with your other, less pressing – yet equally important – debts.
All of this can turn into a headache when it comes time to draw up a monthly budget. Worse still, if you make a mistake, you can consign yourself to taking much longer to pay off a debt that should’ve been taken care of earlier.
By giving you one, single debt to look after, and only one creditor to deal with, debt consolidation eliminates this confusion and streamlines the loan repayment process. It can also save you money: A lower interest rate means you’re making a lower repayment each month, while the elimination of multiple accounts saves you money on fees and charges.
The case of Jake
Jake has quite a lot of debt. Prior to consolidating his debts, he was paying off:
- $150,000 home loan at a 6.9 per cent p.a. interest rate
- $20,000 car loan at 9 per cent p.a.
- $19,000 business loan at 12.5 per cent p.a.
- $15,000 personal loan at 14 per cent p.a.
- $6,000 credit card at 16.5 per cent p.a.
- and $9,000 worth of store credit at 14 per cent p.a.
All of this put his monthly repayment total at $2,682 – not to mention the untold hours he lost having to painstakingly make sure each of these different debts was paid adequately and on time.
But once Jake heard about the benefits of debt consolidation, he decided to roll all his debts into one with Future Financial. Now, he’s paying off a consolidated debt worth $219,000 at only 7.6 per cent p.a., making his monthly repayment $1,633. That’s a saving of $1,049 a month – money he’s now free to use any way he likes, whether to save more or pay down more of his debt
If you want to make managing your debt easy, contact the friendly consultants at Future Financial to find out how, or fill out the form below.
Your Home Your Mortgage:
A Home Buyers Guide
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A Home Owners Guide To Refinancing
From the moment you turn the key in the lock and take those first few steps through your new front door, the feeling of owning your own home is second to none.
Your Home Your Mortgage aims to arm home buyers and investors with essential know-how and proven techniques to ensure you avoid the common pitfalls of financing a property.
There’s no question the current mortgage environment is one of the most competitive in our nation’s history.
Refinancing provides Australians with a platform to get a better deal on their current mortgage, many of which may have been locked in some years ago at interest rates well above what’s on offer in today’s competitive market.