Success rates of Debt Consolidation
The success rate of any plan that is designed for consolidation of your debt is directly related to how well you can maintain it. Duh, right? However, even though getting rid of your debt can be challenging, you can do it with patience, persistence, and perseverance. Remembering this, you must also remember to you make some extra steps wich will give your debt consolidation plan the greatest possibilities of success.
#1. KNOW WHY.
If you go into the debt consolidation process without knowing why you want out of debt, then forget it. Your plan must include a date by when you want to be out of debt, and more importantly, you MUST know what it is that you're trying to accomplish by getting out of debt. Write down the answer to this question on a piece of paper (and your answer must be at least 100 words): When I get out of debt, I will feel ____________.
#2. ABOVE ALL ELSE: When you are consolidating debt, and your plan is to stay out of debt, you MUST cut up all your credit cards. The only exception to this is to have one or two cards, which you can use ONLY in emergency situations. Symbolically, a great way to show that you have gotten a new approach and plan for getting out of debt is to throw away or burn (in a safe place of course) the pieces of your credit cards. If you are building a plan on your own for consolidation of your debt, it is cruial that you cancel the lines of credit that have been extended to you, and also request a lower rate of interest on the remaining debt. With this, you should get an idea on how much money you will be expecting to cover with your debt consolidation plan.
#3. Consolidation also means knowing interest rates
Another thing you really should do is transfer as much debt as possible to the credit card having the lowest interest rate. This credit card will then be the focus of your plan, rather than the many different loans you have from different creditors. In other words, one of the ways you are consolidating debt is by bringing the highest dollar balance to the place that costs you the least.
#4. Consolidation of debt via a bank loan:
Another option you may want to consider in your planning is to get a debt consolidation loan from a bank. If the bank will give you the loan to pay off debt at a lower rate, then you are, in effect, reducing the rates you are paying on the debt, thereby saving you money both sort and long-term.
#5. Buy only what you can pay for:
To make sure that you will stick to your plan, and also not accrue further debt, it is important that you use cash (or the cash equivalent of checking accounts) for all your purchases.
#6. Buy only what you need:
Also, buy only what you can afford. Remember, if you don't have the money for it, then you probably don't need it! You are cutting down on your luxuries with a reason, and make it a point to focus on your debt consolidation plan. Never be tempted to think that one small charge on a credit card won't have a negative impact on your debt consolidation, as it very much will! Remember, that there will be another sale coming to your favorite store in the future, but this is your only chance to get all your finances back on track. It is very important that you stick on your plan for this to happen.
#7. Slow and steady, like the tortoise:
The most important point of focus of your plan should be to commit yourself to start paying off your debts one at a time. Make it a point to first pay off the credit card and loans with the highest rates of interest. In the long run, will you give your plan the best possible chance for success.
#8. Energy goes where awareness goes:
Finally, put your why in front of you. You must remember daily why you want out of debt. Is it because you want to start saving for your child's college fund? Or how about never having another bill collector call you at odd hours of the day? (Or how about NEVER being called by a debt collector again. NEVER. Doesn't that sound good?) Sitck a picture of "Debt Free" on the bathroom mirror (whatever debt free means to you). Show your plan to trusted friends and family (not those who will make fun of you, but those who will support your plan for getting out of debt). Make sure you can see daily what your plan looks like, and why you're willing to go through short-term uncomfortability to get the long-term gain of being debt free.
There are many professionals who can help you consolidate your debt. If you don't feel like you can put together this plan on your own, today would be a good time to call someone for some help putting your plan together.
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