I have been speaking with a few clients over the past week about the benefits of Debt

Consolidation. It is a technique that is really well known throughout the US, but not

so many people are familiar with it here in Australia. I thought I\’d share some of

my views on it with you.

By simply rolling a number of your smaller individual debts such as credit cards,

personal loans and car loans into the one loan it actually allows you reduce your

monthly debt repayments quite substancially. By getting your credit cards (16%), AGC

Cards (24%), Car Loans (11%) and Personal Loans (11%) all onto a lower interest rate

of approximately 7% the money you save is mind blowing.

As an example, rather than paying 16% on a credit card which is maxed out at $5,000,

you can consolidate it onto your home loan. The saving is around $37 per month in

interest repayments. That may not sound like a lot in savings, but keep in mind

interest is charged daily, so that is a saving that compounds each and every day of

each and every month.

This debt consolidation technique allows you to knock more money off of the principal

each month, as you are now paying at least HALF the amount of interest on the debt.

By utilizing debt consolidation you will end up having all of your debt under the one

loan with just the one, low simple monthly repayment.

Many Australians are so highly geared at the moment, that they are only living a week

or two ahead of the debt collector. As interest rates continue to rise over the next

year, the average Australian will be feeling the pinch.

In summary, debt consolidation is evolving as a clean and simple way of restructuring

your finances onto a more effective and efficient financial set-up.

One Response to “What is Debt Consolidation”