The debt epidemic is so dire, with 70.19% of Australian adults owning a credit card and a national debt with roughly $32.5 interest. But, debt is not bad, if you know how to use it wisely. The challenge is how to get real about overcoming debt problems with debt consolidation.
How do you use debt consolidation to go from bad credit to good credit?
Follow these steps to resolve your debt problems:
1) Identify the causes of your debt. Why are you in serious debt? Scrutinize the reasons behind your multiple debts and how it led to disastrous consequences, if any.
Some of the very common causes of debt include spending more than your income, divorce, and poor budgeting. Others go into debt just to make both ends meet while they are underemployed, while others use it for expensive medical treatments.
Some people with gambling and addiction issues also make financial choices that easily lead to damaging their future; especially if they effortlessly mortgaged their house or took out loans in the process. Then, there’s the fact that a lot of people don’t have savings and emergency funds. If you have no money to cover unexpected expenditures or you have no decent savings for serious illness or major life events such as divorce and job loss, it is difficult to avoid unwanted debt.
2) Build a comprehensive picture of both your financial goals and the barriers for achieving them.
Make a list of the following:
- short-term goals
- mid-term goals
- long-term personal financial goals
Examples of short-term goal include paying off your multiple debts with a debt consolidation loan for bad credit, improving your credit score and starting a small business to increase income. While long-term goals such as retirement savings and college fund could be several years away, having your own car or house could be in two years or less, depending on your situation. If you are married, talk to your spouse about it. The moment you agreed on your financial goals, determine how much money you’ll need to achieve them.
3) Plan your actions. Think about the possible solutions to the debt problems you have identified. You can talk to your family or trusted friend about it, or to a finance adviser.
4) Choose the best solution for your debt. The most common solutions include debt consolidation, debt settlement and bankruptcy. Others choose debt management and self-help plan. But, there’s a very effective, yet often overlooked method to solve debt issues: credit repair.
A credit repair company like Clean Credit removes questionable negative listings from your credit report, helps you build good credit, and offers a 100% removal fee money back guarantee if you are not satisfied.
5) Accept and carry out the solutions you have chosen and evaluate, if it worked for you or not.
Final thoughts
If you really want to get out of the cycle of debt, it is advisable to spend your money on measures that will actually grow your finances. There are depreciating assets and purchases that do not add value to your nest egg; so, it is a no-brainer to spend money on those things. Interest rates increase as multiple debts roll over. In the same way, your income and capacity to repay your entire loan need updating. If you’re going to spend the proceeds of your debt consolidation loans for bad credit, at least use some of it to solve the root cause of your financial problems.
Do you want to improve your credit and remove the bad record in your credit report? Contact Clean Credit today