It is okay to use DIY debt consolidation to get out of debt. But you have to understand the rules involved to ensure that your efforts will only lead to success.
According to reports, Americans are more optimistic when it came to their personal finances. The report revealed that this is the highest level of optimism that people have displayed in more than 16 years. When someone feels financially optimistic, it means they are confident that their finances will improve within a short amount of time. This is the confidence that will allow them to pursue debt relief on their own.
While it may seem like an intimidating task to complete, it is possible for you to get out of debt without the help of a professional. It will take a lot of effort and discipline to be successful. But it will be easier to achieve as long as you follow certain rules in DIY debt consolidation.
Rules that will make DIY debt consolidation successful
Debt is powerful enough to affect your financial future negatively. This is the reason why you need to be aggressive in paying it all off. A survey revealed that 13% of their respondents admitted that their credit card debts keep them from saving. If you want a stable financial future, you need to have enough savings to get you through tough times. To reach your saving goals faster, you have to get rid of your debts and you need to do it properly.
So how can you be successful in DIY debt consolidation? Here are the rules that you should implement.
Know your options
Before you do anything, make sure that you know and understand your options. There are so many ways to get out of debt. Consolidating debts can be done in several ways and you want to make sure that the strategy you will choose fits your financial situation. That means you have to consider how much you can afford to pay. There are specific debt solutions that will complement your current financial position – making it easier to meet the monthly payments. While you are analyzing your different options, you might be surprised to find out that consolidation might not even be the right solution. If you need a debt reduction, you might be better off with debt settlement instead of DIY debt consolidation.
Create a detailed plan
Once you have confirmed how you will consolidate your debts, it is time to create a detailed plan. This means creating an effective debt consolidation plan that you can afford to pay each month. Since you are doing this yourself, you cannot rely on a professional to do it for you.
To start, you have to consider your budget. Know how much you can comfortably pay. Do not make the amount too high because the strain on your budget might make it harder to commit to the monthly payments. But you also should not make it too small that it will take you forever to finish paying off the consolidated debts. Find a balance so you can quickly get out of debt without making yourself feel too miserable while doing it.
Commit to the task
After creating the debt consolidation plan, it is time for you to commit to paying it all off. When you look at the plan, it might seem overwhelming and hard to complete. If that is how you feel, you should divide the whole plan into different sections. That way, you can deal with one section at a time. After paying off one section, you can celebrate that small victory and then go on to the next. These smaller accomplishments will make you feel good about your DIY debt consolidation program. When you are motivated, there is a higher chance of completely paying off your debts.
Have a backup plan
Since the future is uncertain, it is always a good idea to have a backup plan. It is possible that when you started the DIY debt consolidation, you can easily afford your payments. However, if your source of income is suddenly compromised, that may no longer be possible. You need to know what to do so you can keep on paying your credit obligations. Be ready to negotiate with your lender so they will allow you to pay a lower amount each month without penalty. You will find that most creditors and lenders are willing to renegotiate with you as long as it means you can keep on paying your debts.
Benefits of using DIY debt consolidation to be debt-free
DIY debt consolidation can be successful as long as you follow the rules. Have the discipline to complete what you started because this debt solution can bring a lot of benefits to your financial future. Here are some of them.
You will learn a lot
First of all, doing things on your own will teach you a lot of things. You will learn important tasks and habits like creating a debt consolidation plan. You will also understand why it is important to live below your means to help improve your financial situation. The fact that you are relying only on yourself means you need to step up when it comes to learning about how to manage your finances better. In the end, the things that you learned will help you make better financial decisions so you can avoid making the same mistakes that landed you in debt.
You don’t have to pay fees
Another benefit of DIY debt consolidation is the fact that you do not have to pay any fees to get out of debt. If you used debt management, you will be required to pay a fixed amount towards the credit counselor helping you out. In case you decided to use debt settlement, you have to pay the debt expert a certain percentage of the amount that you owe. The amount will vary depending on who you choose to work with.
The bottom line is, you will be paying something to the professional who will help you out. If you work on your own debt consolidation, there will be no need for a fee. At the most, you will just pay the origination fee that is required when applying for debt consolidation loans. But beyond that, you do not have to pay anyone else. That money can be added to your debt payment fund instead.
You will feel how hard it is to get out of debt
Finally, all your efforts to complete the DIY debt consolidation will make you realize just how hard it can be to get out of debt. This should make you think twice before you use too much credit. Usually, when you go through something difficult, you will swear not to go through that again. That can be a great way to motivate yourself to make better decisions especially when it comes to using credit. After all, it will be hard to stop using debt completely. However, you still need to learn how to use it wisely so it will not lead to another difficult debt situation.