Is it true that Debt Consolidation is Dangerous for Single Parents?
When you’re a single parent, you know how important it is to be in control of your finances. Of course, when you’re the only person who is taking care of a small child, it can be difficult to plan. A sick kid means taking time off of work and losing income. Child support is great when it shows up, but basing a budget around it is risky. With so many things uncertain, it’s easy to understand why single parents are skeptical when they hear about debt consolidation loans.
A debt consolidation loan is a financial tool that groups all of your loans and credit cards together into a single loan. In many ways, it’s similar to consolidating all of your credit card debt onto a single card, but the application process is much more efficient. Instead of spending hours hunting around for the best card, a debt counselor will review your finances and work with you to find a loan that is right for you.
Choosing the right debt consolidation loan is the key to being successful with debt consolidation. For example, one of the most common reasons for picking debt consolidation is that a parent needs to lower the amount that he or she is paying towards debt each month. Getting a lower payment is possible, but the best way to lower your payment is to pick a loan that offers a lower interest rate and stretches out your payments over a longer period of time. These types of loan can cut what you pay each month by half or more, but it is important to realize that you will be paying on the debt longer. If you cannot pay your bills, however, this type of loan can be the help you need.
<p data-sp-element=”content”>In other situations, it might be more important to you to pay off your debt as quickly as possible. In this instance, you and your debt counselor will look for a loan that has a very low interest rate. Agreeing to a shorter payment term will get you a low interest rate, allowing more of your monthly payment to go towards getting your debt paid off, not interest. While you may pay the same amount as before towards your debt, you will get it paid off a lot faster.