Do you think you have what it takes to do DIY debt consolidation? Or do you think you will need a professional to help you out?
People who have a lot of debts usually try to do their own debt solution first – only to end up failing. While hiring a professional to help you out makes the whole ordeal less stressful, there are some debt solutions that you can do on your own. You just have to understand the debt relief program well so you will know how to use and implement it. This is not so hard to do because there is a lot of information available online.
For instance, if you want to use debt consolidation as your debt relief strategy, you need to know the key ingredients that will make it work. You have to teach yourself about the different concepts and features of this debt solution so you can make the right choices as you use it to achieve debt freedom.
How to make DIY debt consolidation successful
There are a few things you need to keep in mind when you want to be successful in DIY debt consolidation.
Be honest with your payment capabilities
Start by looking at your current financial situation and honestly assessing how much you can afford to pay. Some people force themselves to consolidate debt when in fact, they cannot afford it. In debt consolidation, you need to have enough income to pay off all that you owe. There is no reduction of debt here. The most you can get is a lower interest rate and waiving of fees. But when it comes to the principal balance, you have no choice but to pay it all. If you cannot afford it, then your DIY debt consolidation is doomed from the start.
You need to carefully assess your financial capability in order to find the payment amount you can sustain until you pay off your debt. This way, you do not compromise your other financial obligations. It will also help you keep your credit score up as you pay your loan on time every time.
Choose the right way to consolidate debts
As you pursue your DIY debt consolidation program, you will soon find that there more than one way to undertake it. Knowing your options will help you find the perfect strategy that suits your financial situation. You can use balance transfer, debt consolidation loan, and even debt management. You can also choose to borrow a personal loan to help consolidate your debts.
According to reports, personal loans is the fastest growing product in the consumer-lending category. This is because people are using this as a way to consolidate their loans. They feel it is much safer compared with using their mortgage.
Regardless of your option to consolidate your debts, make sure that you know what is involved and the requirements that you need to meet in order to maximize its benefits.
Create a repayment plan and stick to it
After you have chosen the specific strategy to consolidate your debts, you need to create a repayment plan that you will incorporate in your monthly budget. This will help ensure that you will have enough funds to keep up with your payments. It will remind you of your monthly obligations. Not only that, this repayment plan can track your progress. You will see how much you have already paid off and how long you have to go to be completely debt free.
Stop adding to your debt
Finally, if you really want to be successful at DIY debt consolidation, you need to stop adding to what you owe. If you consolidate credit card debts, your accounts would now have zero balance. It will be very tempting to use them again. Remember that you still owe a lot of money. You should not add more debt until after you have paid off the debt you consolidated. At the very least, you should have paid a significant portion of the debt.
Important tasks when consolidating debt on your own
The success of your DIY debt consolidation efforts will also depend on whether you implement certain tasks while in the midst of paying off your dues. Here are some of the important things that you need to do so you can succeed in reaching debt freedom.
Do your own research
According to a survey, more than half of Americans who have credit card debt used a form of debt relief – but not all of them were aware of all their options. If you really want to consolidate debt on your own, you have to learn about all your options. This is the only way that you can make the right choice about the debt solution that suits your financial situation perfectly.
Revise your budget plan
Another task that you have to work on is your budget plan. This is one of the financial habits that will really help make your debt consolidation program a success. Make a habit of checking your budget plan to ensure that it is still updated and appropriate for your current lifestyle. That way, you can ensure that all your current financial needs are funded. If it turns out that you are spending too much on a particular expense, you can decide to cut back on that. The money you freed can be put towards your debt payments.
Since your DIY debt consolidation program is primarily reliant on your ability to commit to your payments, you need to find a way to motivate yourself. Do not let yourself feel discouraged or frustrated. Debt freedom will take time and you have to be patient with it. Give yourself something to celebrate every now and then. Set up milestones that you can focus on. The short-term milestones will give you something to feel good about without making you feel like the road to debt freedom is dragging too long.