Debt Management Consolidation

Introduction To Debt Management Consolidation

As we are currently in the middle of an economic recession, working hours for many have decreased, many people have lost their jobs completely and the new job offers on the market are not only badly paid but completely nerve-retching you don't get to choose a job based on what you like to do but on what pays the bills. And that's even truer for people in debt there's rates and bills to pay, it's not the time to be adventurous.

Many of these people are tempted around these times to basically take a new credit paying the old ones. The somewhat good side of the crisis is that credit interest rates have gone down. But is this really a good idea?

Dangers Of Debt Consolidation

Just like with basically any other credit, interest rates for debt-consolidation credits are low if your credit score is good. Unfortunately, the likelihood of your credit score remaining good drop when you have lots of other credit to pay. Getting a new credit to pay the old ones can be the equivalent of trying to escape drowning in the sea by jumping in a well. So, before you actually sign a new credit agreement, check out your outgoings and make sure that the added total cost of the loans you're trying to pay is within your budget.

Interest rates go down if you leverage your house and include it in the credit. Tempting, but dangerous. Is this really something you're willing to lose your house over? Times are rough your working hours may decrease further, god forbid, you lose your job, you should try to at least make sure that the roof stays over your head.

Alternatives To Debt Consolidation

Before you are too hasty and apply for debt consolidation, it's recommended you at least attempt debt management. Debt management can make things rough for a while, but in the long term it saves you thousands of pounds that could go into interest rates, making it therefore much easier to later handle your bills.

  • Get a pen and paper and effectively calculate everything that you're paying out for. You'd be surprised how much of your money can be spent if you actually take a look at what it's going on. This option is advisable for people with a background in finance, and has the added bonus of being free.
  • Download a debt management software. If you're not willing to pay for it you can always get a free one. This option is definitely more objective and will not be afraid to tell you what you need to do. The main con would usually be lack of flexibility it's very hard to have a computer understand the needs of a human.
  • If you have a little money on the side, you can try a debt management company who can actually give you individual advice. Debt management companies are trained to handle your debt. This is however the most expensive solution and has the downside of restricting you to the companies working hours.
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Debt Management Consolidation