Dealing With Your Finances After Splashing Out At Christmas

Christmas is a time for family, food, and festivities, but, unfortunately, it’s also a time of year where you tend to spend a lot of money. If you haven’t quite got the cash for all of the presents you need to buy, many people turn to loans and credit cards for financial assistance. However, this means that these people start the new year with a lot of debt. This is a less than perfect situation, which can take a toll on your relationship, and the rest of your family. Despite this, there are lots of debt relief programs that can help you when you’re in a rut. One of these debt relief programs is debt consolidation.

 

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Photo by Olu Eletu on Unsplash

 

Debt consolidation loans are there for when you have lots of smaller loans, so that, rather than making several payments a month, you’re just making one. As you can imagine, this has a lot of benefits, but it also has some drawbacks too. If you’re considering debt consolidation to deal with your finances this year, then read the advantages and disadvantages below before making any solid decisions.

 

Pro – Lower Interest Rate

There are plenty of problems with having lots of little loans, but one of the biggest is the fact that each of these loans will have their own interest added on, which often isn’t cheap. When you merge all of these smaller debts with a debt consolidation loan, the interest that you pay on this loan is usually less than the combined interest of the other loans, so you save money immediately.

 

Pro – One Simple Payment

When you have to make payments for multiple loans each month, it can be difficult to remember to pay all of them, which could result in charges, thus increasing your debt. With a debt consolidation loan, you only have to remember to make one payment each month, which will reduce your chance of incurring charges, and can help you to stay financially organised.

 

Con – Just Moving Debt

The biggest criticism of debt consolidation loans is that you don’t actually pay off your debt with them; You simply move your debt from multiple companies to one. This means that you avoid tackling why you got into debt in the first place. If it was just overspending at Christmas, then you should bear that in mind for next year, but if it was something more serious, like lack of income, then you need to make some changes.

 

Con – Takes Longer

You are often able to make smaller payments with debt consolidation loans, which might be convenient now, but it will keep you in debt for a lot longer than a larger payment. For this reason, it’s always sensible to use a debt consolidation calculator to figure out how long it’s going to take, before committing to anything. You might find that another method is quicker and, therefore, more suited to you.

 

No one enjoys being in debt, which is why it’s so important to take control and deal with your finances. If you’ve read this and decided that debt consolidation isn’t the way to go, then don’t worry, there are plenty more routes to take, so just do your research.

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