Is Debt Consolidation Going to Help You?

Should you consolidate your debts? Well, that really depends on whether or not debt consolidation is going to repaying your debt easier.

Debt consolidation, after all, is just a tool. In the right circumstances, it can be incredibly helpful. In other circumstances, it can be ineffective or actively damaging.

So keeping that in mind, here are a few key signs that you may want to consider consolidating your debts.

Consider consolidating your debts if:

Your paycheck runs out before you’ve covered every bill

If your income isn’t enough to cover your debt payments, consolidating your debts may help. It’s not a guarantee and it will depend largely on which method of debt consolidation you use, and how big the gap between income and expenses has become.

More: When One Paycheck Runs Out Before the Next One Arrives

You occasionally forget to make a payment on one or more debts

If the sheer number of different monthly payments is challenging for you to manage, then consolidation could certainly help. At the very least, it should leave you with fewer payments to manage.

More: Tips to Help You Pay Your Debts On Time

You’re using a budget, but you can’t seem to make any progress against your debt

It may be possible that part of what’s holding you back are high fees and interest charges. If that’s the case, consolidation may help reduce interest and jumpstart your progress.

More: Understanding the Cost of Interest

You have your spending under control, but your debt is holding you back

If you struggle with debt because you spend too much, it’s probably a good idea to tackle that issue first. For someone who cannot control their spending, consolidating your debts may actually give you a false sense of security and simply lead to more debt.

More: These are the Signs of a Shopping Addiction

You have a long-term plan to become debt-free

Debt consolidation can help you create breathing room in your monthly budget, but it’s not a small step and definitely not something you should do without thinking through the ramifications. Using debt consolidation to buy yourself time may work for a bit, but eventually that kind of short-term decision making may catch up to you.

In other words, debt consolidation works best as part of a long-term plan to get you out of debt. If you’re using debt consolidation as a stopgap or short-term measure, you run the risk of making things worse.

More: When is Debt Consolidation Not a Good Idea?

Every circumstance is different and there is no solution that fits every need. That said, if your debts are weighing you down and you’re ready to make a commitment to becoming debt-free, consolidating your debts can be a great way to start that process. Good luck!