Debt Consolidation Loans - Getting Your Finances On Track

Before you decide to take on the additional debt associated with weddings, you might want to consider debt consolidation prior to the big day. These loans can assist you in putting your finances in order so you can get off to a fresh start when you and your fiancé start your lives together.

What is Debt Consolidation?

Debt consolidation involves taking out a loan to assist you in paying your existing accumulated debt. Debt consolidation creates one payment and typically is at a better interest rate than you would pay on each individual debt. Companies that provide debt consolidation services can provide you with a precise date in which all your debts will be paid off. If this sounds like an option you'd like to consider, read on for some additional information.

Identifying Your Debt

The first, and hardest part, of debt consolidation is determining where your debt comes from. Prepare to be brutally honest! Take a look at your total financial situation to assess where you are. On your monthly bills, are you making the minimum payments required or are you paying in full? A debt consolidation loan can assist you with making more than the monthly payment if you find yourself in this situation.

If you are like most people who have debt issues, it most likely stems from a little piece (or many pieces) of plastic known as credit cards. Credit cards are easy to use because using them seems like spending free money. This is dangerous in the long run. When the bill comes, it is very tempting to pay only the minimum due. If you only pay the minimum and not the credit card balance in full at the end of the month, interest accumulates fast! This interest is then added to the balance that you already owe. Depending on your interest rate, this can be detrimental to the progress of paying down your debt.

Consolidating Debt on a Credit Card

If your debt is mostly on credit cards, have you considered consolidating all your balances to one card? Consolidating to one card will be easier in the long run. This reduces the risk of missing a payment, which can get you further behind on your finances and can hurt your credit score. A debt consolidation loan can help too because you can get a loan that will cover all your debt-credit card or other types-and will get you back to a good starting point again. Using this loan to pay off your balances can be a liberating feeling, especially right before the wedding.

A fresh start does not mean you can continue to spend as you have been spending. You will never break free of your debt if you only choose a consolidation loan to begin your cycle of spending all over again.

Your best option is to do your homework to find a realistic payment amount that works for you and your new budget. Your new budget should consist of your income after taxes and then subtract only your bills for the month-rent or mortgage, utilities, car payments, etc. After you've determined what you can afford, it's time to make the choice as to whether a debt consolidation loan is right for you! You'll be on your way to a consolidated payment as you prepare for the next stage of your life.