A Consoldation Loan and Budget Can Save You from Drowning in Debt
If the last two years made you feel as if you might be drowning in debt, you could swim to shore, so to speak, by utilizing a consolidation loan combined with a new budget that you stick to strictly.
College Loan Debt Skyrockets
In the US, the average student loan debt of $32,731 means that new college graduates pay an average of $393 per month in an effort to reduce the debt. That massive number doesn’t even count their credit card debt. The typical American accrues a $5,525 credit card debt.
We Think We Need Stuff
Our consumer society convinces us that we need “stuff” and “things.” Shiny object syndrome causes us to spend money on items we don’t actually need. Instead of doing this by budgeting and saving up for big expenses, we get the instant gratification we crave by using credit cards.
How a Consolidation Loan Helps
You can use a consolidation loan from Priority Plus Financial to temporarily fix the problem. This type of personal loan allows you to obtain the funds to pay off both your credit cards and student loan all at once.
You’ll only have one payment per month, but you must make it. Personal loans don’t offer the deferrals and hardship plans that Sallie Mae does. Obtaining a consolidation loan can only help you lastingly if you reduce your spending. That requires learning to budget and sticking to the budget.
Budgeting Becomes a Must
Budgeting means cutting up and canceling your credit cards if your spending got out of control. You’ll need to make a budget that only uses the money you earn each month to pay your bills.
If you can qualify for a low-interest rate loan, a consolidation loan can help you make a huge mess manageable. If you maxed out all of your credit cards though and you have a large student loan debt, you may only qualify for loans with sub-prime rates. That means you’ll pay a lot of interest and end up paying more than you already owe.
Get a Second Job
Try the option of getting a part-time job or a side gig like driving Uber to help you quickly pay down your debt. By tackling your smaller debts first – the credit cards with small balances – you can reduce the percentage of your available credit (credit utilization). This makes you look better to credit bureaus who give you a higher credit score. A higher credit score can help you earn a better interest rate, so the loan costs less.
Ultimately though, learning to live on a budget remains the only way to keep things manageable. Otherwise, you’ll end up with a huge debt again and that’s a cycle you just have to break.
