Can debt consolidation help me to stop bouncing checks?
Debt consolidation is a good way to get in control of your finances and start building wealth, but few people realize that it can do a lot more than just lower the interest rate that you pay on your debts. Going through this process can help you to really improve the way you handle money. For some people, that means they can significantly reduce the number of times they overdraw their checking account.
Of course, getting a debt consolidation loan doesn’t mean that this problem will automatically go away. Most people overdraw their checking account because they wither forget about a debit or check that they wrote, and/or they spend so much each pay period that they don’t have any money left in their account to cover a mistake. Typically, this occurs because people have too many bills to pay.
If you find yourself juggling multiple credit cards, personal loans, mortgages, student loans, utilities, and auto loans, there’s a very good chance that you have to remember several dozen bills every month. Add to that the number of times you swipe your debit card to pay for groceries, day care, and gas, and you might have to track over 100 debits a month. With a list that long, it’s not surprising that you occasionally forget something, even if you have a system in place to catch everything. It’s even more likely if you share the checking account with another person.
How Debt Consolidation Help
Rather than try to keep up with everything, it can make a lot more sense to reduce the number of debits you make. Debt consolidation helps with this by taking the dozens of small loans that you pay each month (often with changing monthly payments) and turning them into one payment with the same amount due every month. Your paycheck comes in, you pay one amount for your debt, then you know how much you have left to spend on other aspects of your budget.
Because debt consolidation will give you a lower amount, you’ll also increase the chances that you’ll have some money left over at the end of paying your bills. That gives you a buffer that will help you to cover a mistake.