Many people today are struggling to keep up with their bills and get on top of their debts. Whether you’ve suffered loss of income, had a medical emergency, got hit by student loans or simply had a little too much fun at the mall over the years, juggling all those debt payments every month can be overwhelming.
For many families, debt consolidation offers a potential path to financial relief. But there are some common mistakes you want to avoid when consolidating your debts.
Mistake #1: Not Having a Plan to Get Out of Debt
First, you’ve got to have a plan to help you get out of debt. And you’ve got to stick to the plan. This will take discipline. You’ll have to make some changes.
Start by tracking all your income and expenses, creating a budget, and cutting back on spending wherever you can to get back to positive cash flow (i.e. spending less than you make every month).
Mistake #2: Confusing Debt Consolidation with Debt Elimination
Once you consolidate multiple loans and credit cards into a single loan with a single monthly payment, don’t make the mistake of thinking that you’re home free. While a debt consolidation loan can greatly lower your monthly expenses and keep collectors off your back, your debt hasn’t gone away.
It’s still there, and you still have to pay it off.
Mistake #3: Continuing Poor Financial Habits
The biggest mistake people make with debt consolidation is that they go right back to the same behaviors that created all that debt in the first place. They continue to live beyond their means, using credit cards to buy things they don’t need or cannot afford.
If you’re going to get out of debt, you have to make significant changes in your income and/or spending habits. Otherwise, you’ll just keep maxing out your cards, and your debt will increase rather than decrease.
If you’re struggling to keep up with your debts, contact Magis Funding right now. See what options are available to help you combine your debts, save money on interest, lower your monthly payments and turn your financial situation around.