If you had a water leak in the place where you live would you ignore it? How about a gas leak? Most might be able to ignore a dripping faucet but they won’t be able to ignore a major leak not only because of the waste of resources but also because of getting a huge bill. Ignoring a gas or water leak is costly. And the same goes for a money leak from paying interest rates.
Finding the Money Leak
To determine how bad your money leak is, you need to do a little research. Get as much information about the money you owe for everything that you are paying back for as you can. This includes mortgage loans, car loans, credit card balances, and all other debts. Find the current balances and the interest rates being charged on each loan.
What you need to focus on is the interest rate on your consumer debt because that is where the high-interest rate charges are found.
The Financial Post reports that Canadians owe more than CA$600 billion in consumer debt. The average Canadian carries CA$22,800 in consumer debt, not including home loans. CBC reports that the amount of consumer debt is about CA$10,000 higher for those between the ages of 46 to 55.
Credit Cards reports that the average interest rate for credit cards is 17.61% (September 4, 2019). If you are an average Canadian, you could be paying CA$4,000 or more in annual interest for borrowed funds on credit cards. That is a major money leak!
Fixing the Money Leak with Debt Consolidation
If you are paying 17% interest or more for credit card debt and other high rates for other types of loan, a debt consolidation loan is a good thing to consider. With debt consolidation, all your high-interest rate loans and credit card debts are paid off. Then, you end up making one manageable monthly payment for the total of all the debts.
Not only is this convenient, because you get rid of the pile of annoying bills, but it also saves you money. You can also request a loan term that gives a steady monthly payment that is manageable within your monthly budget for living expenses.
A Word of Caution
Management of personal finances usually benefits from a debt consolidation loan; however, you must resist the temptation to use the freed-up available balances on credit cards to increase your debt after you get a consolidation loan. This will make your finances worse, so keep this in mind and exercise some prudent self-control when it comes to new expenditures.
In the end of the day …
You might find yourself asking yourself why you should undertake such a large task as consolidating your debt but after you have done so, you will notice how much money you are saving by not paying unnecessary interest. Stop this money leak as soon as possible. Apply for a debt consolidation loan today to lower your overall interest expenses and feel better about your financial future!