Articles

Why debt consolidation could help you get over your Christmas spending headache

Tuesday, January 14, 2020

Well, Christmas and the silly season is over for another year. We hope you enjoyed quality time with family and friends, even though it has also been a costly time. We imagine you spent a lot on presents, food and then the summer holidays on top. Before you know it, your Christmas spending spirit has already overtaken your Christmas budget!

Have you just found yourself in Santa’s ‘naughty’ list because of your silly holiday spending? The good news is that I can help you get your finances back on track! Mortgage brokers don’t just organise mortgages, we also provide the right finance solutions for your individual needs and circumstances. To help you get your Christmas debts under control, you might want to consider consolidating your debts.

What is debt consolidation?

Debt consolidation works by taking out a low-interest loan and using it to pay off all your high-interest debts, such as credit cards, store cards, pay-day loans, and after-pay accounts and the like. So how could debt consolidation help you get over your Christmas spending headache?

Here are the top benefits of consolidating your debt.

  1. It makes your debts easier to manageDebt consolidation involves rolling all your existing debts into one, making it easier to manage. Instead of having to keep track of multiple repayments to multiple parties – and on different due dates at that – debt consolidation means you’ll only have to make one convenient repayment each month, cutting back time and paperwork. With only one repayment to remember, you can create a budget and stick to it more easily.
  2. You decide how you want to consolidate your debtThere are generally two ways to consolidate debt. You may consolidate your debts by either taking out a personal loan or by refinancing your home loan. This is where you essentially refinance your mortgage, so you can get some cash to pay off your debts. As your mortgage broker, I can access both home and personal loans with competitive rates. With two options, you can compare them and decide which will work best for you.
  3. It may help reduce interest feesDifferent types of debts have different interest rates. Credit cards, as a form of unsecured debt, usually have high-interest rates. Home loans and personal loans, on the other hand, usually have lower interest rates. Choosing between the two to consolidate your debts means less of your money will go to paying interest fees.
  4. Repayment is flexibleDebt consolidation means your monthly repayments will be spread out over a long period of time, offering more flexibility. This will make it easier to repay your debts and creating your personal budget will be a breeze. If you choose to refinance your home loan, you may even be able to make extra payments so that you can pay off your debts sooner.

Find out today if debt consolidation is right for you

As with any other loan options, debt consolidation is not applicable to everyone. It all depends on your current financial situation and goals. Some may end up paying more accumulated interest over the life of the loan, versus paying off a credit card debt with a shorter period. There are many factors to consider before deciding to go for debt consolidation, so it’s important to first speak to a mortgage broker (like me). I may be able to suggest other ways to get back in control of your finances.

Have you blown your budget last Christmas? Don’t panic – I’m here to help! Reach out today and let’s help you make it back on the ‘nice’ list this year!