How to Save Money through Smart Debt Consolidation
Through smart use of debt consolidation and astute financial practice in managing your debt, you can save substantial amounts of money.
The ideas below are some of the ways that you could save money as you pay off your debt consolidation package.
1. Refinancing your debt consolidation package
If a long period of time has elapsed from the day you consolidated your loan and you have managed to, for example, get a better paying job or inherit property, you can use such circumstances to refinance your debt consolidation package and therefore save some money.
2. Streamlining your payment process
By taking up a debt consolidation package, you automatically reduce the number of transactions that you engage in to pay your debts.
This can be a money saver because often times you may not realize the cost of all the transactions that many different debts can have on you.
With a single payment, you will not only have the peace of mind of knowing how much you have to pay every month to clear off your debt, but you will also save money through less transaction costs.
3. Enjoy borrower benefits
If you manage to pay your debt consolidation package with consistency and even manage to make some extra payments, your lender will often extend some benefits for being a good customer to you.
These benefits can include free automatic payments and reduced interest rates that can further save you some money.
4. Seek a lower interest rate
If after a period of time you find that your financial situation has changed and you are able to improve your credit score, you can easily negotiate for a lower interest rate.
A lower interest rate will mean that you can reduce the amount of money you have to pay for your debt consolidation package and therefore save money.
5. Swapping from a variable interest rate to fixed-rate
If you seek to negotiate for a fixed rate of interest on your debt consolidation package, you are likely going to pay a smaller overall amount by the time you have paid off your debt consolidation package. Just make sure that you do the full calculation so that you can determine how much you will be saving.
6. Lower your monthly payments
By negotiating to pay your debt consolidation package over a longer period of time, you will lower the monthly payments.
This is a good idea if you need the breathing room to be more flexible with how you can invest the extra money in your pocket.
For example, if you can invest the extra money in a financial vehicle or a business that will give you a higher return on investment than the monthly interest that you are paying, you will be able to get out of debt faster.
If you want to save money by choosing to consolidate your loans, you need to change the financial attitude that got you into the debt situation. Although consolidation can offer you the conveniences mentioned above, at the end of the day, being frugal and financially smart will get you to your target of reaching financial freedom faster.
Category: Debt
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