Most financial difficulties nowadays involve unsecured loans which are hard to manage. Credit cards and private financial loans are amongst the financial obligations with the highest rates of interest. In fact, Australian household financial debt averages 130 percent of GDP and this is certainly made worse by the pre-occupation of buying real estate property.
For those who have sleepless nights over credit card balances, there are lots of ways to deal with financial debt. Among the numerous financing alternatives available to you is debt consolidation, a process of combining 2 or more debts in just one that results in a single debt repayment with lower interest costs.
Debt consolidation or refinancing is effective for most individuals – from students with academic loans to professionals with increasing family requirements and business owners establishing their dream businesses. If you are struggling to manage your debts today, you may well be thinking of refinancing. Below are a few points to take into consideration:
Explore your alternatives before refinancing. Speak to your credit provider and try to negotiate a new arrangement. For example, you can apply for hardship variation, prolong your loan period, or postpone your repayments. You may even benefit from switching mortgages, choosing the right mortgage solution, or selling your home.
Many debt consolidation businesses offer attractive solutions, but all of them might not be feasible for your existing financial situation. If you wish to seek help from a debt consolidation company or credit provider, make sure that they are licensed by ASIC. You are able to use the Search on ASIC Connect’s Professional Registers to check for companies as well as other registers.
Recognize the benefits to make the ends meet. As a result of a debt consolidation program, you’ll save on monthly instalments as a result of a reduction in rate of interest or perhaps an extension of repayment term. You may also simplify your financial plans by having your debts in just one loan. It spares you against the hassles of trying to keep track on the payment due dates and seeing numbers on separate bills.
Comprehend the risks and think about how these may have an effect on you. Debt consolidation could have a few disadvantages – you could potentially lose an asset, slide back into poor spending habits, and end up repaying a debt a bit longer or fall for dodgy brokers and lenders.
This debt solution will work for you in the long-term if you’ve got the discipline to manage your spending and adjust your money habits. A credit counselling is usually recommended to make sure that debt consolidation is not just a temporary fix.
The formula for effective debt management is budgeting and establishing financial goals. Rather than creating a big green monster under your bed, make up your mind to pay it off in a wise and efficient way. You will be pleasantly surprised to realize how quickly you are able to knock out your debt. Living free from financial worry is not merely good for your credit score but also for your peace of mind.
Call Tax Accountants Cranbourne at 1300 300 106 for further information.