What are the advantages and disadvantages of consolidating debt.?
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I am in the process of trying to get out of debt(or close to it) as fast as possible. The main thing i'm worried about is my credit card debt which is $7,000-8,000 because my student loans and my car have good rates. Is it worth it to consolidate my cards into one payment or should i just try to pay one card off at a time and pay minimums on the other cards? Any advice, or personal experiences would help.
What are the advantages and disadvantages of consolidating debt.?The primary advantage is purely mathematical -- if you can consolidate to lower interest rates, then you pay less interest and pay the loans off faster.
The primary disadvantage is psychological -- if you take out a home-equity loan, for example, to pay off your CC debt, but never made the effort to balance your income vs. expenses, then you'll find that your CC debt will build right back up again -- and you'll have that *plus* the home equity loan.
The first, most important task is to ensure that you can live your life on 90% of your income. Then you'll be able to work off the debt and have it not build back up again. Once you've reached the point where you're living beneath your means, debt consolidation makes sense.
Good luck,
Doug
What are the advantages and disadvantages of consolidating debt.?It really depends on what kind of a spender you are.
If you are in control of your spending I would consolidate and pay off the loan. I think 1 payment is easiest and could save finance charges as well.
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