Credit and Debt Management

Sep 27, 2013 by

Many people carry debt, and debt management is a skill that most of us have to learn as we go forward in life. Whether you’ve acquired your debts in service of your education, to pay for medical emergencies, auto repairs or simply to pay for necessities like groceries, you may need a little help managing it all. If after consideration you feel that you could use some help to pay down your credit cards faster or get lower monthly payments, debt consolidation might be the solution for you.

What is Debt Consolidation?

According to companies like CreditGuard, as a debt management program consolidation is one of the lowest-risk options that still provides a sizable reward in terms of savings over time. By consolidating all of your monthly payments into a single low-interest payment, you save thousands of dollars in interest over the terms of your loans. Some consumers have reported paying off their credit cards and other debts much sooner than they would have otherwise done.

Debt consolidation is NOT a new loan. Remember that if a company asks to take out a new loan, it might not be in your best interest. New loans could lead to credit score reductions. Instead of taking out a debt consolidation loan, what you want is a debt management company that will make payments to your credit cards and other unsecured loans each month on your behalf.

You only have to make the single monthly payment, which is often less than or equal to what you’d otherwise have to pay. The difference is that more of your money is going toward the principal, letting you pay down your debts that much faster. This will subsequently improve your credit score that much faster.

Managing Your Debt Permanently

While debt consolidation programs offer a way to get out of your current debt more quickly, there are permanent debt management strategies that you can learn through credit counseling. Many organizations offer consolidation and counseling under the same roof, with the aim being that consolidation is for the present while counseling is for the future. Counseling will give you the tools you need to make budgets, save for the future, invest wisely and develop five- and ten-year plans to ensure your financial security.

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