How Debt Consolidation can help get Your Financial Life off to a Great Start
Decades ago, a young person who was just starting out would have been able to start saving money with his or her first paycheck. With no debts, it was fairly easy to quickly amass enough funds to get a starter home and a small car. Today, however, most young people start out their financial lives tens of thousands of dollars in debt. That makes it next to impossible to buy a car, a house, or save for retirement.
Fortunately, there are things that you can do to limit the ways in which a huge debt burden will effect your life. The first step is to limit the amount that you pay each month towards your debt. When you’re just starting out, this frees up cash that you can use to make other purchases. In some cases, it will make your existing loans affordable; you won’t have to borrow money or take on a second job waiting tables just to get your student loans paid at the end of the month.
A debt consolidation loan is able to lower the amount that you pay every month towards your student loans and credit cards because it combines all of your existing loans into a single loan with a lower interest rate. If you’re current paying double digit interest on the credit cards that you financed your college textbooks on, or if you’re paying a variable rate on loans you took out to pay tuition, a debt consolidation loan can make it possible for you to pay one rate for the life of the loan that is lower than what you’re currently paying now. That can lower the amount you pay each month by over $100 in some cases.
<p data-sp-element=”content”>A debt consolidation loan can also give you a longer period of time to pay back the loans. By doubling the number of months that you make payments on your large loans, you can cut the amount you are paying by half or more. That will give you a very low payment while you’re starting out your professional career and getting established. Once you’re secure and have some money in savings, you can choose to make extra payments to get the loan paid off early. You can control how much you pay.