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When Consolidating Debts, Should You Target All Debts or Only Some?
When you decide that you should be consolidating debts to make your debts more affordable, you will need to make a decision right away. You will need to decide whether you need to consolidate all your debt or only some of them. This is an important decision that will impact your financial life, so proceed carefully.
When you start consolidating debts, you can consolidate some of your debts only. Some debtors, for example, decide to only consolidate their high-interest or credit card debts. The advantage of consolidating debts in this way is that you can tackle the highest interest and get the largest savings. Through this method, you also give a company control over only part of your debts. Plus, when you choose to consolidate only some of your debts, you can usually still keep some of your credit cards. Most debt consolidation companies wisely will not allow you to use any credit cards that are being consolidated. This allows the debts to be repaid with no new charges accumulating. However, this also takes away the safety net and convenience a credit card offers. By consolidating only part of your debt, you can keep a credit card or two for emergencies only. As long as you pay off your credit cards at the end of each month, they will not make consolidation any less affordable.
On the other hand, deciding to consolidate all your debts has some advantages. With all your debts consolidated, you can more quickly start to live debt free. You may also be able to realize the best savings, because all your debts will be combined and all will have lower interest rates. If you decide on consolidating debt in this way, you will also have professional help with all your debts, which makes it less likely that one of your debts will continue to spiral out of control even as you are paying off other money you owe. With all your debts consolidated, you can also enjoy one monthly payment for your debts, which can make bill-paying time much easier.
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Alternatives
If you are unsure about debt consolidation, you may want to consider the other alternatives you have.
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